The big oil picture: Keep Alaska weak

Posted: Monday, October 29, 2007

Being just a common citizen of Alaska who is trying to understand the oil industry's position on Alaska oil, I will try to place myself in their shoes. If I were in charge of one of the oil companies operating here in this day and age, what would be my incentive to invest here? Thinking globally with all the new pressures for energy from the U.S., China, India and the rest of the planet, why wouldn't I want to increase production in Alaska?

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It seems there would be an increased urgency to get that Alaska oil out of the ground and to market. But wait. Is that looking at the big picture? My company is already making record profits from $80-plus oil. The Alaska oil and gas isn't going anywhere because I have it locked up in the ground, but the other dwindling global reserves are being aggressively sought after by other oil companies and nations such as China. If I focus money investing in Alaska's relatively small reserve, I could find myself without a larger reserve elsewhere on the globe for my company to tap future profits from. With that in mind, now the logic says to secure and develop oil from other places around the globe, and warehouse Alaska's supply, keeping the infrastructure in place and running below capacity. Also by doing this I can put off the expense of removing all that North Slope equipment or share the costs of removal of the pipeline, which was the agreement when the oil industry was finished pumping oil from the ground. The cost of returning everything to "as it was" would be astronomical. If enough time elapses, this agreement will be forgotten much as the Valdez spill has been.

So while I remove oil as slowly as possible, I might as well not pay any more taxes than possible because I owe it to the shareholders to profit as much as I can. While it seems I don't have Bill Allen to serve as middleman to buy off, intimidate, and put fear into the Legislature, there still are old allies in there to keep the tax structure as low and as confusing as possible and keep Alaskans divided among themselves. It is advantageous to the bottom line to keep Alaska in as weak a position as possible for a maximum effect of fear and intimidation.

Dave Nussbaumer


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