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Berkowitz changes direction on oil industry

Posted: Sunday, October 31, 2010

Democratic candidate for governor Ethan Berkowitz is attacking incumbent Gov. Sean Parnell, saying his natural gas pipeline plan and oil tax system are failures, but those plans are more directly linked to Berkowitz' Democratic allies in the Legislature than they are to the Republican former lieutenant governor.

That's left Berkowitz in opposition to the plans supported by the state, including House Minority Leader Beth Kerttula, Berkowitz successor in that position.

"During the campaign, maybe he and I have some disagreements about it," Kerttula said. She declined to specify the disagreements.

"If he's elected, we'll have some good discussions about it," she said. The Alaska Gasline Inducement Act, Berkowitz says, is Parnell's plan and at a cost of $500 million has bought only a process.

"It's never going to yield a gas pipeline," Berkowitz said.

And the state's oil tax plan, Alaska's Clear and Equitable Share act, he said, has resulted in declining flows through the trans-Alaska pipeline.

Berkowitz said he'd propose tax changes, presumably reductions, which would "reverse" the decline. As Alaska runs out of oil pipeline flows have fallen from a peak of 2 million barrels a day more than 20 years ago and is now at 654,000 barrels per day.

The campaign now has Berkowitz running as the pro-oil industry candidate against Parnell, a former oil industry lobbyist. That's got pro-industry journalist Paul Jenkins writing in the Anchorage Daily News that "Berkowitz sounds like the Republican in this race."

That's making it uncomfortable for some of Berkowitz' friends from his legislative days, including Rep. Les Gara, D-Anchorage, who are now backing him in his race for governor despite positions he's now taking.

Gara declined to endorse or criticize Berkowitz' key oil and gas plans, but said he continues to "feel good" about his votes for AGIA and ACES but was open to revisions Berkowitz might propose.

"I think Ethan is out there trying to find things that work better," he said.

Sen. Bill Wielechowski, D-Anchorage, and Co-chairman of the Senate Resources Committee said Berkowitz' proposals would be a mistake for the state to adopt.

Both Resource Committee and Parnell Administration analyses of ACES concluded that since it was adopted revenue for the state and oil development were both up, he said.

"The number of jobs are up, and the oil companies are investing billions," he said.

And in direct contradiction to Berkowitz' claim, Wielechowski said AGIA is working and making unprecedented progress on a pipeline.

"I think AGIA has been successful and it has moved us forward on a gas pipeline - it is not the time to abandon AGIA," he said.

The state adopted the AGIA plan after the oil industry refused to consider building a pipeline without big tax breaks. After the state began AGIA, the industry was suddenly motivated and began developing their own proposals, he said.

Berkowitz has called on Parnell to make public the bid TransCanada has received for the pipeline. Parnell said the bids are in the hands of a private company, TransCanada, and the state has no power to make them public even if it wanted to. TransCanada has said that making public their bids while a competing project's bids remain secret could put them at a competitive disadvantage and that bidders themselves have been promised confidentiality.

Kerttula answered several questions about Berkowitz' call for openness by saying she'd like to see the bids herself before finally saying Parnell is correct.

"I wish they could be open. Contractually, I don't think that's possible legally," she said.

House Minority Whip David Guttenberg, D-Fairbanks, is in the No. 2 position in the Democratic caucus and a long-time Berkowitz ally and disagrees with some of his current positions, but is backing the Democrat despite his calls for more tax cuts.

"While some tax changes may be necessary, Guttenberg said he doesn't trust Parnell and the Republican legislative leadership to develop them.

"When (Parnell) is talking about working with the industry, it's as an employee," he said. "When Ethan talks about working with the industry, it's negotiating."

Parnell, though, said he's less interested in what Berkowitz is saying now than his history of trying to raise taxes on the oil industry when he was a legislator.

"A tiger doesn't change its stripes," he said.

• Contact reporter Pat Forgey at 523-2250 or at patrick.forgey@juneauempire.com.



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