The oil truth
Published Tuesday, April 29, 2008
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To the editor:
Corporate oil and truth? Rather tough to say in the same sentence.
For more than 30 years, Alaska has heard promises and great plans for development of oil and gas resources. In all that time, there has been no attempt to market gas and little to increase oil production.
If we want to hear any more hollow words from Big Oil, we can just rewind the tapes.
Is it just coincidence that Big Oil is now vowing to move ahead with the construction of the natural gas pipeline, with or without the state? Could it just be a “returned serve” because Alaska has vowed to build the line, with or without Big Oil? It’s all like a big game of chess. Now with Mr. Irwin’s decision on Point Thompson, Big Oil is saying that without Exxon and Point Thompson in the bid for marketing the resources, their project may have trouble moving forward.
Already looking for a back door out, I’d say.
Alaska does not have to go under hack to corporate greed and warehousing efforts. I believe our governor can see through the smoke from those folks and will take a back seat to no one. We can get it built with or without them, even if we use our Permanent Fund to do it.
Then we can charge them transportation fees and get more royalties. Yes, they can refuse to sell the natural gas they have by lease, but only at the peril of great anger from their stockholders.
They can say what they want in any number of ways and any degree of clarity. It is just words without any action. Rather like a blank round, a lot of noise and smoke but no projectile. I say “go” Mr. Irwin and Governor Palin, corporate oil is not using live ammo.
Leases issued by Alaska to all corporate entities should have a “drop dead” date. No action, no lease, enough said.
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Glad to see we've gotten out of the mode where every Alaskan is either a "shill for big oil" (aka British Loyalists) or "anti-oil populists"(aka Patriots). Everyone knows the Palinistas who hate the oil companies are REAL Alaskans (was that dripping with sarcasm enough?)
Perhaps it could be that Exxon is Exxon and Conoco is Conoco and each company plays their hand a little differently. Tell me, what resources (manpower, experience, materiel, technical proficiency, financing) the State has to construct a $20 billion+ gas pipeline? Oh, and how much of the gas does TransCanada own?
I think real Alaskans, should they want the State to build an in-state gasline should call the Governor's office and demand using the Permanent Fund to begin planning and construction immediately.
Natural gas is great!
Heath Edward...
....Have you ever partaken of a divinely delicious libation that's a specialty of Alaska? ...we call it "The Ice Worm Cocktail"
Maybe you're related to one intrepid Maj.Percival Brown from London on the Thames?
The game of "what makes us rich, makes you poor" is so verry 12thCentury..
..it's the 21stCentury now, maybe I can interest you in a game of 3D-KlingonChess down in the Holodeck ??
====================================================
bikebuilder...
....very laconic, very funny !!!
..
Chuck: DEAD CENTER OF THE TARGET. If the international oil companies want to be part of Alaska's future there needs to be an universally understood foundation that; ALASKA is a sovereign State, who own the resource and that; the State of Alaska has obligations to its citizens, that supercede the needs of corporation profits.
Yeah, well the problem is that a resource in the ground only has theoretical value. You see, we have the resource but they have the ability to extract and monetize the resource, so we kinda need them as much as they need us. Oh, and there's a little thing called contract law. Alaska can't really just abitrarily choose which contracts they've entered into to negate and those which they will honor.
DT - What? I think you could be making a profound point, perhaps. However there's just a little touch of crazy that prevents it from completely making sense. For the record I have lived in Alaska far longer than I've lived anywhere else being graduate of FNSBSD and UAF. So while I don't get to call myself a real Alaskan (that distinction being reserved only for those people born here and of a 5th generation of greater), your xenophoic little barbs don't hold water.
Out - Can you not grasp that their profits and the State's obligation to provide natural gas and maximize our natural resources are intertwined?
I say,
Jolly Good Show.
Every comment but one in this thread.
HeathEdward: Oh, I grasp that the corporate profits have been the focus of the State of Alaskans attention for a long time. I just don't believe that the oil industry has had the best interest in the citizens of Alaska in mind; nor has the State of Alaska fulfilled its Constitutional obligations to ALL ALASKANS.
Out-
That's the whole point! The State is incapable of fulfilling those obligations without the companies. I'm not saying that we haven't rolled over for many years, but a successful relationship that benefits both the State (and its residents) and companies requires a course correction,not a course reversal. It's not the company's job to look out for what's best for Alaska. They're in BUSINESS. A standoff where both sides dig in their heels is going to yield nothing for anyone.
Don't forget that while they're profits our soaring, roads are getting built, schools are getting repaired, and dividends will be at record highs. It seems like many Alaskans want EVERYTHING and want to pay for nothing. Personally, I think the dividend is one of the worst ideas ever, because THAT'S what most Alaskans pay attention to.
HeathEdward: It could rightfully argued that relationship with the oil industry has occurred for more than 30 years and this relationship with the State has still be unable or unwilling to build the necessary infrastructure in vast regions of Alaska.
The "piggy bank" permanent fund has been invested in developing the infrastructure of places other than Alaska, for the most part, and the small dividend comes nowhere near the costs that this lack of investment into ALASKAN infrastructure could have benefited Alaska.
You are correct, the profits are soaring; but I believe that most Alaskans will say that cost of goods and services are raising even faster for a negative net value.
So HeathEdwards, where do you think Big Oil gets their expertise for locating, drilling and extracting these resources?
They hire it of course. Those people are known as their "employees".
Based on your logic though, I guess Alaska can't hire anyone to do that for us.
BTW, Alaska CAN retract those leases because the language contained within them states that the failure to develop the resource is a violation of the terms of the lease. The State of Alaska was patient for many years, not disagreeing with the producers claims that developing the gas was not economically feasible. However, developing that gas became economically feasible over 5 years ago, and the State and independent experts have done the economic modeling to prove it. Now it's simply greed and manipulation on the part of Big Oil that is keeping that gas in the ground.
I have ZERO sympathy for these companies. According to Forbes list of the top 2000 richest corporations in the world, Exxon is ranked #5, Royal Dutch Shell is ranked #6, BP is ranked #7, Total is ranked #15, Chevron is ranked #17, Gazprom is rank #19, and Concoco is ranked #22. 7 of the top 22 wealthiest corporations in the world are Oil & Gas companies - 1/3rd!
Just for kicks and giggles, 3 of the top 4 are banking corporations (they make up 6 of the top 21) and 4 of the top 20 are insurance corporations (ING Group is #9). Only 4 of the top 22 wealthiest corporations in the world don't belong to either the Oil & Gas, Banking or Insurance industries. They are Walmart, At&T, Berkshire Hathaway (financial institution none-the-less) and General Electric.
Can anybody tell me what the profit is on a barrel of North Slope oil is for Conoco and BP?
As far as expertise goes, the state bids out road construction, and other infrastructure. The oil companies bid out the design of TAPS and the pump stations and building them. They also bid out much of the drilling and exploration. Their true "expertise" is interpreting seismic data and marketing, including influencing politicians.
PFD's for Alaskans' comparative meager share of the profits (to the state and Big Oil), or dividends to Big Oil's shareholders will be at record highs, Heath?
Yes, a certain amount of the state profit goes in to PFD principal.
But, our share is entirely dependent on markets, not profits.
In a few years, as a few years ago, we will see if our dividends will be "at record highs." One thing's for sure: the oil shareholders' will be (or are), and the state is certainly reaping the benefits and not sharing the windfall directly.
Say what you want, Heath. Don't blame me (or us). Or call us socialists, commies, or hand-out getters. We didn't write the Alaska Constitution.
If you think the PFD is such a bad idea, I hope you don't apply for it.
FrozenAK, All I could tell you is I couldn't produce Alaska crude for less than 120.00 a barrel.
I was just really interested to know if anybody had the current break down of a barrel of oil right now. Essentially looking at values equated to...
1- Lifting costs
2- Transporation costs (taps)
3- State Tax
4- Federal Tax
5- Profit
Out-
So now the oil companies are not only responsible for providing for 85%+ of the State's operating budget, but now they have to build infrastructure that is arguably the State's responsibility to develop?
ADF-
I agree, the State can hire those people. . .in theory. However many of "those people" are employed with oil companies making FAR more than the State can feasibly pay. So we've addressed the talent issue, but about materiel and equipment? The bottom line is the State is not in the business of planning, constructing, and operating a gas line. As I said in my earlier post, anyone who thinks the State ought to be the constructor/owner/operator (which is really the definition of socialism) of the gas pipeline ought to put their money where their mouth is and demand we tap the Permananent Fund to go down that path.
Furthermore, my point about retracting the leases was not directed at the Pt.Thomson/Exxon decision as of late. I was responding to the sentiment that seems to be so prevalent among these posts that we should run in and retract all the major's leases because "it's our gas". So really, don't sharpshoot me. I was not challenging that specific decision but an attitude that "Alaska is sovereign" as though that means we can completely ignore the force of law. How about I use that argument when the State shows up on your doorstep to start drilling on your property because they've found "our resource"? Which, oh, by the way, they could because unlike the oil companies you haven't purchased any oil and gas subsurface rights.
Frozen-
Under current oil prices with the progressivity adopted in November, it is speculated that total government take in Alaska is in the neighborhood of 80%. The remaining amount is not all profit, just what the government doesn't tax.
Mike-
Are you really comparing a road construction project like Farmer's Loop or the Johannsen or the Mitchell to one of the largest (and most expensive)construction projects in the world? Really?
HeathEdward-
I posted this almost rhetorically. Just really wanted to know if the general public had an idea on the actual numbers.
I beleive the current profit margin is around 15%, with state/federal tax being closer to 70%, (the state taking in around 80% of that).
I'll try and get a exact number tomorrow.
Frozen-
Sorry, I misunderstood your point. The numbers I suggested for total government take came from House Finance Committee testimony earlier in session from OUR Dept. of Revenue. Not from the oil companies.
Corinne-
So, what's preventing you from buying shares in any of the companies? Are we all supposed to be given shares in their companies just because we happen to live in Alaska? Actually, you're inaccurate about how the State's take is calculated, the amount we receive is based on profit. Hence why it's called the petroleum profits tax. ACES did not eliminate that element, it modified the base rate and the progressivity, so indeed our share is linked to profits and profits are, in part, determined by market conditions. Also, I didn't use the term socialism to be pejorative, but rather to point out that having the State act as the owner/operator of a gas line, does quite properly constitute a textbook example of socialism.
Lastly, what part of the State Constitution are you referring to? I see nothing in Article VIII that seems to apply to your point.
One of the things that inspired me to use "DistantThunder" as a nickname is the lightning-fire that kicked off the methane lurking in the surface of a melting clathrate rich tundra.. the fire raced too fast to drop smokejumpers, it burned 250square miles wall to wall between the Nanushuk and Itkillik Rivers. The slippery-slope is in a precarious avalanche balance of runaway methane releases.
More gas is lost through bubbling lakes than the producers will ever pump through their big-steal-boondoggle.
What's much more important to focus on than the big-pipeline is to take a serious look at the potential architecture that can be accomplished right now with an initial small investment in plastic-gaslines.
Gas gathering lines can pass lots of gas to Fairbanks more quickly from closer sources than the North Slope.
Gas gathering lines can also play a critical role in maintaining the AK-resource on the slope and the ecology of the arctic in general.
I've figured out a fun and exciting way to harvest the orphan-gas locked under the arctic lakes during the winter, and this gas will be shipped to market thru a big network of plastic gas gathering lines.
The INE would have a lotta fun with this..
http://www.alaska.edu/uaf/cem/ine/
Roadless Roads...
I think a "smart gasline network" spread all over Alaska can be considered by the BigDipper to be a logical extension of the State Highway System. Imagine having 3"LPG-gaslines routed to every village in the Yukon-Koyukuk, and every few miles there would be an automated point of purchase kiosk where you can refuel your sno-go, and send an email too.
...flash/rumble
Flash/Rumble -
Distant Thunder who uses a lot of big terms and technical jargon, yet oddly enough, no one who knows anything about these issues has ever given any credence to these "real" ideas.
DT- Did you get some of these ideas from one of the many times you were abducted by "little green men"?
Successful corporate policy: Take a simple idea and complicate it to the point the world believes no one but the corporation has the knowlege and ability to handle it.
Successful government policy: If it aint broke, 'fix it' till it is.
The use of natural gas predates the use of gasoline. Contrary to what the corporate world would like us to believe, natural gas is an abundant, easily transported, commonly used resource. The state plays into this by making a big deal out of the process from lease to export.
Alaska has an opportunity to provide ourselves and future generations cheap, plentiful energy; before we export a cubic foot of gas, we should utilize this resource ourselves. No matter what it takes, an in-state natural gas transport system is the only option that makes sense.
Good letter Chuck, and I think you're right on! The whole anouncement smacks of an attempt to upstage the governor because she, of all things, seems to be working for the good of the state, and driving a hard bargain. Does this mean she "hates oil companies"? No, just that she recognizes them as competitors, not buddies. They are also peeved that much of their network of shill politicians is in jail, or got the boot. Now they have to deal with a governor and government that are going to insist on the state getting its fair share for ALASKA's oil and gas. Good heavens!
Of course, these companies goals are profits. Only. So I'm sure there's more to this.... It is no secret they have been trying to drive a wedge between the current administration and the people of the state.
Heath, you obviously didn't read what I wrote re dividends, profits, etc.
Don't flatter yourself so much all the time. My socialism comment had nothing to do with your comment.
Guess you got me on the constitution. Do you disagree that it has been understood and repeated by most in this state that the people own the resources collectively?
What have the courts said on it?
Do you get the PFD?
You sound like an (arrogant) adherent of DenaliGuy's excellent example of successful corporate policy.
I'm curious... Did you turn that legislature job you had during the corruption ridden tax talks into a Big Oil job?
Chuck contradicts himself. Who is the greedy "Big Oil" person? Oh, is it the same guy who is also the million small stockholders with their 401K's like me, or you.
We should not blame "Big Oil" ... that is a myth. You only need to look in the mirror to see the guilty party and to your elected officials.
The fact is that we are very lucky and fortunate to have any oil revenue, gas for our guzzlers, cheap transportation and a warm house. Stop crying and get off the couch and do something productive like get a fuel efficient car, turn down the thermostat, stop wasting water and hot water, stop buying prepared food and learn how to cook ... goes on forever. In other words .... be responsible and productive.
The oil companies have invested and made huge amounts of money in Alaska. Most of us over the years have come out on the plus side of the deal. In 1999 they were in a very positive mode for our state. They even had a slogan, "No decline in 99" referring to their positive outlook on investing heavily in exploration and production to offset the declining number of barrels of oil per day down the pipeline They were also pretty excited about the success they were having with sending large "envelopes" of natural gas down the Transalaska Pipeline. They dropped that slogan by the end of that year and all traces of it were cleaned up.
The new policy with GWB in office has been about going for the "off limits" fields that they know contain large reserves. ANWAR , Lake Teshukpuk, etc.
This policy has also included getting a big gasline to the midwest.
They have been heading for the biggest profits possible while they have this powerful ally running our
country.
The day Bush got into office gas prices at the pump started going up - just a few sneaky little cents at a time.
It is my belief that no anything should be decided while Bush is in power.
Corinne-
You're exactly right about owning it collectively. However, I think that most people toss around "The Constitution" without ACTUALLY knowing what it says, or more importantly what it means. You are one Alaskan that has a certain point of view and I'm Alaskan with a different one. I want the gas to be developed and monetized, while also providing for in-state natural gas needs. However, I do not believe the State is capable of adequately handling this task, nor do I think that this is the business they should be in.
Also, it is very nice to know that you are incapable of making your point without insinuation, innuendo, and thinly veiled personal attacks. In no place during my response(s) to you did I call you "stupid" or "ignorant"? No, I simply corrected your inaccuracies. For the record. . .I had NOTHING to do with the original PPT. So toss about corruption references all you wish, there is no credibility to them. That's a "red herring" argument. You're hoping to cause others to look away from the lacking in your own argument by suggesting something unseemly about me for which you have to evidence. I guess you've been reading the Palinista play book.
No, I did not go to work for "Big OR Small oil" after I left the Legislature. In actuality, I make slightly less in my current position than I did with the State. Furthermore, I own no stock in any oil company.
My primary interest is that I wish more Alaskans would take the time to learn the issues a little more thoroughly before opining and worse yet castigating those who disagree with them.
Our Conflict of Interest and Collusion challenged Republican, Democratic and Independent Legislators are being bribed with a couple thousand dollars masquerading as campaign dollars in order to get Tax Breaks and Contracts worth billions and tens of billions of American Taxpayer dollars. They're prostituting their votes to financially benefit themselves and their Corporate Pimps as well as legally shielding themselves and their Cronies. This Conflict of Interest and Collusion is being legalized by the equally morally, legally and ethically bankrupt as well as Conflict of Interest challenged Neo Con United States Supreme Court Justices.
Since we have the oil being pumped out of the ground in Alaska, why can't we have agreements subsidizing the oil and natural gas so we don't pay the highest prices in the nation? In this day and age of record after record breaking profits from the Neo Con owned Oil and Energy Congloimerates, it would be a drop in the bucket of their profits if Alaskans had access to reasonable costs for oil and natural gas. From the same Neo Con Conglomerate and its ilk who are refusing to pay for the Exxon Valdez oil spill even after almost 20 years.
With the tens of billions of American Taxpayer dollars in Tax Breaks from the Neo Con Parasites infesting the Executive Branch, to the Neo Con owned Oil and Energy Conglomerates, why haven't they built any refineries?? And the campaign contributions from the Corporate Pimps to their Legislative prostitutes are coming out of the Tax Breaks so its ALL American Taxpayer dollars anyway.
By the way.. Isn't Conflict of Interest and Collusion against the law? Even if committed by Neo Cons?
CurtJ-
It's actually the Bilderbergers, The Trilateral Commission, The Council on Foreign Relations, and select members of CIA in a conspiracy masterminded by the Illuminati. It's rumored that you can't be a senior oil executive unless you've come from the Skull and Bones. Neo Con, that's too funny.
Did you ever see a Lawyer try to get a gallon of milk out of a cow?
...it's kinda like watching a college graduate business expert in the middle of a PowerPoint Presentation stop dead in his tracks when he realizes his wife has been cheating on him with his boss.
Big-Oil is in a panic right now because the world is waking up to their monopoly, their greatest fear is a widespread revolt forcing them to go down the path of MA-Bell..
..Warren Buffet would agree that the likelihood of you carrying a cellfone nowdays would be much different if Congress had not forced a breakup of that monopoly.
Heath,
You do realize the oil companies make more than the State of Alaska on the North Slope, don't you? listening to you it sounds like they barely get their money back. The fact is the State can hire others to design, build, and monitor quality control for any size project. We've done it for several large dams, like Bradley Lake. We were considering and may yet do the Susitna Dam. Then there was the capitol move. A truly huge project that the state almost under took.
So yes the State of Alaska could do the gas line though I personally feel a smaller intrastate line with branches and moderate shipping facilities in Valdez would be in the best interest for the state.
The ability to hire out the talent needed to develop resources is why many nations are now taking control of their own resources. Think of it as outsourcing. The free market is not against that is it?
I get a kick out of the anti-conspiracy theorists. It makes them feel smart and superior to take shots at the people who connect the dots and get a big ugly picture. Conspiracies can and do happen. They are as natural to societies of human beings as the winds and tides are to our planet. The negative impact is huge and should not be denied.
The oil companies have long followed the same trail as any other organized crime organization. They should be investigated by people willing to risk assassination. When dollar amounts get into the range these guys deal in history has repeatedly shown that human life means nothing.
Mike, Here's how ya do the Susitna Hydro Project...
Ya put a hundred of these gizmos all up and down the river--->
http://peswiki.com/index.php/Directory:Z...
....and then you line the inside of them with astroturf and nomad miners-moss.... and then you pay me a 10% royalty from all of the gold, platinum, rhodium, etc. you find.
Power, Gold, Fish, Flood control, elegant architecture in a park-like setting, and the girls will go ga-ga-4U... we'll be hearing "Indian Love Call" echoing off the flanks of Denali.
Mike,
You mention "....the oil companies make more than the State of Alaska on the North Slope". Do you happen to have the exact numbers?
At $88.00 per bbl
State Tax was around $44.00.
The Federal Tax was around $7.00
Lifting and Transportation costs approx $20.00
Producer profit is around $15.00
As the price of oil goes up, so doesn the percent taxed by the State. I'm not a mathematician, but I do believe the State is bringing in the Lion's share.
I using my BIO-DIESEL process system in my garage to fill in my truck also heat system. I refuse to pay diesel pump at the gas station also I apply for pfd.
Mike-
Given progressivity, if/when oil reaches $150 per barrel. . .the State of Alaska's take will be $23 billion in tax revenue (this came from the House Finance Committee), the oil company profits will be $5 billion. Under the ACES revisions, Alaska's revenue has doubled so that Alaska's take is quite comparable to oil company profit.
Also, if you combine the Bradley Lake Project, Healy Clean Coal, the Capitol Move, etc. you might have a project that comes close to approximating the size, scope, and cost of a gas line. How can you not grasp that the project, even under AGIA, will be something in the neighborhood of the top 10 projects ever undertaken on the entire planet--okay, just not be sharpshot. . .in modern history.
It really is a poor comparison to compare Alaska to military juntas and dictatorships like Venezuela and Libya. Just because they're "nationalizing" their resources doesn't me we should follow suit.
SoSorry-
I get a kick out of the conspiracy theorists who see one lurking around every corner.
Obviously, some big guns have been hired to aire biased information.
As stated the price we'll pay is based on current market value. At the stock exchange.
The oil companies have leased, and are under contract to market the commodity, timely.
With all the indecision it looks like were in for another 30 years of lawsuits, what ifs and maybes. Without proper, and continual guidance and pressure.
Their have been some excellent comments posted by Alaskans.
Maybe it's time to turn the heat up on the big guns with more tariffs, with state authorized incentives to give the proceeds back to the Alaskan victims. Apparently there's more than enough to go around.
Leverage can be very useful. What we need in AK. is a break.
Frozen Ak says at $88 a barrel the oil companies make $15. Then Heath says, now the oil companies profit is comprable to what the State takes in.
I must be confused. There's another point, or two. The companies like to include our royalty share as a tax. The royalty share is really the small amount we did not give away. In fact, we pay them to ship it thru the pipeline. The shipping cost has been a consistant scam from the start. In several law suits the companies have been instructed to change their tariff structure. You see, since they own the line it does not matter what they charge since it goes from one pocket to the next, unless you (like the State of Alaska) are not an owner.
Last what is it about Exxon's profits that are dwarfed by the State's income? Are you two saying the state made more than $40 billion last year?
Mike-
Stated as fact of the matter that the Oil Companies take in more from the North Slope then the State does. That simply is incorrect. More then 50% right now is going to State Taxes. Even without lifting, transportaion costs, and federal taxes the State is taking more of the chunk.
Mike-
Not really fair to compare Exxon's worldwide profits from all their projects to profit v. state take in Alaska. Alaska's take increased from approximately $2 billion+ to I believe somewhere around $5.5 billion annually. Those are rough numbers. . . I haven't looked at the latest revenue source book in sometime. But, the legislature used numbers like $7 billion in excess earnings over FY09 and FY10. Let's not forget that oil revenue constituted 85% of the the GF Operating Budget before all this. And, you can't really say that royalties go in a different category. They're all considered government take, just as it is with mining.
When you guys talk about dollars-&-sense would you please cite your sources for your information?
....transparency begins at home
if you guys have trouble with some of my conversations with "little green men" please take the time to review all of my previous posts, most of the nitty-gritty of my comments have been cited by me at least once already...
thank you for your perspecacity.
Gotcha.
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