News-Miner Editorial
A blockbuster plan
But Gov. Palin’s energy proposal comes with many questions
Published Sunday, May 18, 2008
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Stumble It!Gov. Sarah Palin came out with a surefire attention grabber Thursday in her $1.2 billion proposal to help Alaskans handle soaring energy bills over the next year or so.
It’s an ambitious plan that addresses the very real troubles confronting many Alaskans and Alaska businesses. Sharply rising energy prices — for heating fuels, for electricity, for gasoline and diesel for vehicles — are cutting deeply into people’s finances.
But is the governor’s plan the right thing to do?
The governor’s proposal has two main components: Giving $475 million to utility companies and cooperatives to lower customers’ bills and providing $729 million to provide residents with $100 monthly energy debit cards.
Alaska certainly seems to have the money to pay for this. And many people will no doubt see the proposal as a deserving one, since the state treasury is taking in so much money from the high price of oil — the very factor that is harming personal and business bottom lines.
What really would happen — if the Legislature enacts the governor’s plan — is that the state would essentially be returning money to the energy companies. That may be acceptable in the short term, because the governor and others do need to be mindful of how high energy prices can affect the state economy and local economies.
But there are several major and minor questions and concerns that need to be addressed and answered before this plan becomes law.
Here are just a few:
• The economic principle of supply and demand says demand will fall if prices are too high. While there is legitimate concern that demand can’t fall beyond a certain point, especially in winter, it seems that the governor’s proposal would cause people to use more energy than they should. The incentive to reduce energy consumption will clearly fall if government starts paying the bills.
• Consider Gov. Palin’s proposal in light of Saudi Arabia’s king telling President Bush this week that Saudi Arabia won’t increase oil production to lower oil prices. Shouldn’t the U.S. be trying to increase domestic production? Having government pay our fuel bills doesn’t lead U.S. residents to demand that their own government increase domestic production and look for alternative sources of energy.
• What about next year? There’s an old saying in politics that it’s difficult to stop a government assistance program once it gets started. High energy prices are going to be around for a while, so it’s possible Alaskans will want the bailout program to continue. Families that grow accustomed to the $100 in monthly energy aid per person might have a hard time adjusting once it ends.
• How will the state guarantee that the utilities, who will be the recipients of nearly half a billion dollars under the governor’s plan, actually lower utility bills by the amount the governor wants?
• How much will it cost the state to administer this program? How many people will need to be hired? What happens when people start calling to say that their debit card is lost or stolen?
• Is it correct for a large family to receive more in monthly energy aid than a small family? The governor’s plan would grant $100 per month to each qualifying Alaska Permanent Fund dividend applicant. A family of four, therefore, would receive $4,800 over the course of a year. A family of six would receive $7,200 in that same period. Would those two additional children actually account for $2,400 more in energy costs? That’s difficult to see. The formula needs a thorough review.
• It doesn’t sound very compassionate to say it, but is a program like this the proper role of state government?
Gov. Palin’s proposal raises many practical and philosophical questions. Alaskans, while wrestling with the high prices, must look within themselves for the answers. State lawmakers, who will be called upon this summer to act on the governor’s ideas, need to discuss and debate the points and try to look beyond their own election-year worries.
Community Discussion
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• It doesn’t sound very compassionate to say it, but is a program like this the proper role of state government?
I believe, no, I KNOW this money belongs to ALASKANS!! The government is there to administer the spreading around of it, but the windfall profits the State is receiving is OURS!! It seems that in your whole editorial, you fail to realize that. WE are the STATE!! The State is not just a bunch of bureacrats down in Juneau, it is US. Maybe if you took that approach, this whole program would look entirely different to you.
yj- i dont think that you read this the whole way through, and i dont think that you understand the proposal at all.
what, are we supposed to burry the money and just sit on it forever because "THIS MONEY BELONGS TO US".
wow
i think you should research a little more
I for one am struggling to pay $815 per month on heating oil. If I receive $100 per month if the Gov's plan is passed will I have to pay taxes on it? Although I qualify for the weatherization program this year, I was told I may have to wait close to winter or longer before my home is insulated. This is a very stressful situation for my family. I need answers now!
The primary reason we have an energy crisis is that Alaska has failed to develop and implement a comprehensive energy plan. Alaska isn't short on oil, natural gas, coal, hydro-power potential, wind, and other alternative energy sources; WE HAVE JUST BEEN LULLED TO SLEEP.
The constant allusion that ALASKANS must pay lower 48 and world market prices for OUR OIL resource is simply a slide of the hand card trick. The Administration, in particular the Commissioner of Natural Resources can find that it is the PUBLIC INTEREST that a reduced rate for OUR OIL and GAS can be sold at a reduced rate. And the Legislature can enact provisions of Law that comply with the Constitution that all ALASKANS share in the bounty of our natural resources.
Supply and demand is more of a world problem than an Alaskan problem. We have abundant oil and gas (supply) and demand (while growing is no where near the available level of supply) in Alaska.
Increase supply for whom? We are in court suit now with EXXON that will not produce known reserves of lease hold gas and oil at Point Thomson. We should develop our resources, BUT why should we grant special exclusive rights to our resources if the major international oil companies only want to set on the lease and exclude others that may want to develop that resource?
Developing alternative energy sources is a matter of focus of policy and economics. Will we wait until the last drop of oil is pump out of the ground before we begin to consider other sources of energy? Leadership is the problem. You can guide the development or you can react to the problem. It has been to long that both our state and national leaders have been reacting instead of leading.
Lets cut the middleman out of this; ie: the world commodities market. How about a 3 part law that reads something like this:
1. A % formula for the prices of different products of crude oil based on todays standards of profit. (If Flint Hills nets, say, $.15/gallon on gasoline produced and sold in the state, then the formula should reflect that.)
2. All crude oil processed and sold domestically (retailed within the state) will be sold to producers for $.05/barrel.
3. Crude oil and related products sold or otherwise removed from the state will remain priced according to the world commodities market.
Seems easy enough to me; after all, what everyone agrees on is that the oil belongs to us; the people of Alaska. Anyone else ready to pay 25c/gallon for gasoline, or 30c/gallon for heating fuel???
Before I get ripped to shreds over that comment, let me say I have no idea what the actual figures are for prices/profits, etc, but I think my idea has merit and deserves serious consideration regardless of the actual numbers.
(Even $1.50/gallon for gas or oil sounds good to me right now, after paying $106 in Healy yesterday at the gas pump for less than a fill up...)
The only downside I can see would be the possibly huge influx of people moving to Alaska to stay warm!
The primary reason we have an energy crisis is that the US is borrowing excessively and driving the value of the dollar into the dirt. As oil is priced in dollars this exploding debt is sending the price of oil sky high. We need to stop the borrowing (mostly from China) and get our national ecomonic house in order. Alaskans are as guilty as anyone for supporting the policies leading to this mess and we need to get onboard for long term solutions, not temporary it's all about me relief programs.
The plan to give the debit cards to only people who qualify for a pfd is wrong.Depending on the month you moved to the state, you could wait for up to 18 months to receive any assistance. The right thing to do is give assistance to the member of the family that the utility bill is registered to. All Alaska families should recieve help with the high price of fuel oil and electricity reguardless of length of residency. In conclusion the utility companies need specific guidelines on how much utility bill are lowered,to make sure it gets done.
We could secede from the u.s. and become our own country with our own oil. if we become a monarchy I call dibs on kingship. we could sell our excess oil to the u.s. and canada and use the money to break Alaska up into smaller states and build a transportation ifrastructure throughout the whole country. We could ..... we could....
Hello, need I remind all Alaskans that is our oil and we should be priced gouged so bad we have to leave the state. Once again the Legislature will stop this too. This will definitely define whos in charge, local politicians or the people.
From the people I have talked to. most Fairbanksans are in support of Governor Palin's plan. We have seen our fuel and electric bills skyrocket and are ready to reclaim our resources. The comments on the Anchorage Daily News, ADN.com, show a completely different viewpoint. Anchorage has the cheapest natural gas in the US. Their electric cost from this natural gas is only .11 kWh. They are looking at this rebate as unneeded and a waste of money. Unfortunately for us, the legislative members from this area control Juneau.
When in doubt, go back to the Alaska Constitution:
Article 8 - Natural Resources
§ 1. Statement of Policy
It is the policy of the State to encourage the settlement of its land and the development of its resources by making them available for maximum use consistent with the public interest.
It has been proven by ISER that the population of rural Alaska is collapsing. Fairbanks and other medium sized towns in the Interior are next. And if the land is being unsettled due to the State refusing to make Alaska- owned resources (Crude oil) available at a fair price, then that is a violation of our Constitution.
With some tweaks the Governor's plan can work. Providing every Alaskan a debit card is not reasonable- but may be a political price required to win legislative approval.
As Fairbanksgas points out- there is not an energy crisis in SE and Anchorage. The problem is where residents rely on oil for heating and electrical generation, (here).
The problem is- as we well know- Anchorage and Juneau do not care at all about Fairbanks. And if their representatives prevail, Fairbanks may be screwed.
Wasn't it pro oil lapdog Sen. Bert Steadman who, when asked about the energy crisis said, "Winter's over, get over it".
That's right, Fairbanks. Don't like it, just move. And if you take a massive loss on your home because everyone else is selling too- well, too bad.
I invite those News-Miner editorial board and politicians who believe that the energy crisis is bogus to live in one of our more remote villages for a year to see what high energy costs are doing to our entire Alaskan economy. I don't think that they would be so quick to tear down the Govenor's plan to bring immediate relief.
We do need a short, median, and long-term Alaska Energy Policy and Plan BUT we need help now!
I challenge the News-Miner editors and politicians to come up with a better immediate energy relief plan instead of simply being "nattering nabobs of negativism".
Amazing to me, but I agree with much of this editorial. (Administration of anything by the state is always expensive.)
Why is the plan per person? Wouldn't it be more reasonable to be per household?
Also, I just "don't get" paying the electric companies. I agree with the much-expressed idea that it would better to sell the state's oil in-state at a non-inflated rate... to benefit individual Alaskans, rather than the Alaska government.
andora: RIGHT ON, for the challenge to the "bogus" news staff and politicians for a year in rural Alaska, BUT I think about a month in January is about all they could stand at 60 below without any heating oil and electricity.
Fairbanks needs to reach out to Rural Alaska for a concerted effort on the emergency energy issue and the long term solutions for our energy needs. The FNSB has been thinking in the box and this is the time to broaden the horizon for the benefit of ALL ALASKANS north and west of the Alaska Range.
If the Legislature has a fact finding meeting for the GASLINE and the ENERGY special sessions, as has been suggested, WE need to be organized and present a united front of outraged citizens, like the effort that saved OUR MILITARY BASE.
I have no doubt the Governor is up to her neck in alligators..
[she's one of the most intensely lobbied Governors]
This week's energy stop-gap in an emergency measure, so I wouldn't try to over analyze it. [analysis paralysis?]
This summer I'm building a woodstove-boiler system that I can fit in my big old bus.
Anybody with a C-minus from hi-skool metalshop, a cutting torch, arc-welder, drillpress, and a junkyard, can build one of these things.
It will incinerate almost anything including rubbertires and toxic-paints, and 100% of the pollution [arsenic&mercury yes,except CO2] will be recovered by electrowinning the recovery tank [good4gold too]
It makes tons of steam, lotsa hotwater and hot dry air, and it also makes 2000watts of power.
Since it's on wheels I can pull up to any big building and heat it up toasty, fire up the spa, and turn some of the lights on without buying any power.
FREE PARTY!!! all winter at my place!!!... just bring your trash and some junky firewood or coal.
Distant thunder, I want one!! Where are the plans? Pleeze let us in on this... This sort of inventiveness is exactly what we need to adapt to ever changing conditions. I personally don't want to go like the dino's...
Something that is really hard for me to believe is last summer when I was in Alaska, reg. gasoline was $2.68 per gal. while in Ca. it was $3.00+ per gal. Now here in Ca. a gal. of reg is at $3.85 per gal. while in Fairbanks it is around $4.05 per gal.?????? As far as giving $475 million back to the utilities Co., etc. I don't get it, but as far as giving it back to the public in assistance... Fantastic! One of the reasons that I don't stay in North Pole year round is the cost of heating fuel.
I'll repeat my comment on the news article Friday:
"The govenor's plan is like giving free heroin to drug dealers." The money from the state coffers is just going to go straight back to the big oil companies, and all we'll do is keep up our wasteful use of energy.
We've watched the feeding frenzy of building excessively huge homes and buying yet bigger SUV's and Pick-up trucks over the last 15 years and shook our head, we knew this day was coming. The price of energy is NOT that expensive relative to everything else. Our household income is 10X what my parent's household income was, our house is worth 10X what my childhood home was (much smaller and energy efficient, though), and the cost of gasoline is 10 times more than my parents paid at the pump. Is the governor going to hand out free debit cards so we can afford food too?
I can understand concerns about the cost of energy in the bush, the last 30 years of state subsidies for energy seemed like a great idea at the time to some folks. Why was that money not put into alternative or local derived energy? Then there would be no energy crisis in the bush.
DistantThunder or whatever you call yourself, please just don't park your bus up wind from me, OK?
The alternative plan:
More direct grants for energy retrofit.
More grants to utilities for alternative/local energy development
Fuel efficient vehicle pay out: The state pays you $100 for each MPG of the EPA rating of your vehicle per year.
So let's say that you trade in your Expedition that gets 12 MPG, for a Forester that gets 20 MPG, and you drive an average of 1000 miles a month, that's a savings of 33 gallons or $130/month, plus the state would pay you an additional $800 per year for driving a more fuel efficient car! If you already drove a Prius, you'd be laughing to the bank! (Hmmm, I wonder how much I'd get for my bicycle...?)
Reduce demand, stabilize prices, and the monetary value is an investment that will keep paying.
$815 a month for heat???!!!! We kept our 1,680 sq. ft. house and a detached 700 sq. ft. shop at 68 degrees (or warmer) for less than $2,000 for the year. We used nothing but #1 heating oil. No wood, no electric heat, no coal or propane.
Maybe it's time to add some insulation, close off some of what I can only assume is a large house, buy a new energy efficient heating system or close that open window.
For a State full of supposedly independent, conservative, government-haters there sure is a lot of whining going on.
Funny how when it comes to development or other things, villages are up-n-arms about how others are encroaching on their way of life...heritage, etc...
But when it comes to hand-outs they are all writing in about how others should move out to a village and try to live, etc etc etc and how the borough and others aren't doing enough to help them.
Which is it? Stay out of your business or not - you all get me soooo confused!
A buncha little welfare states in remote locations I think!
Hi,
I think a set Dollar amount should be sent to all Alaskan so they can pay for Gas/Heating Oil/Electric Bills them selfs and I say this from the bottom of my heart(you are hearting all ALASKANS and all Seniors that is on a fixed income.
Stop kissing each others *** and send a check to all of us before JUNEAU decides to spend the money on Big Oil Companies and Electric Companies.
I will now step down from the plat form and see if the HOT AIR from Juneau will settle and the TRUTH will be known who we can trust in JUNEAU.
God Bless all ALASKANS send the P.O.M.letters to JUNEAU.
As long as people in the U.S. feel the need to drive vehicles that get 12mpg the cost of fuel is going to keep rising. It amazes me how many trucks I see everyday driving around with nothing in them. I laugh and say "there's another millionaire". My Subaru gets around 23mpg and I can hardly afford the gas. I saw a news report the other day that said Americans are carrying balances on credit cards to the tune of almost a trillion dollars. I think it's safe to say that that number is going to start rising sharply. I say just put the money on our dividends. If people waste it that's their problem.
Now - I am not a millionaire but the price of gas hasn't hurt me a bit....
I figured out how much extra it is costing me a month and it comes to around $200.00 - $250 The permanent fund checks are $100.00/month if you break them down to monthly (more than that really)
So I guess I am out an extra 100-150/month. If you all complaining are living that close to your budget - work more...get a second job...or ride a bike ---
For me it will take a lot more than 100-150/month to ride my darn bike to work.
Millionaire - hah!!!!! Maybe I live within my means more than you, Gdogg......maybe you should use that permanent fund check for fuel instead of another trip to Hawaii this year...
This is a 1.2 billion dollar 1 year bandaid. How about just divide it among us all and give us an extra dividend, that's 10 grand for my family :). This is a stupid waste of a lot of money, we need a more permanent solution.
Interesting concept...seems like she (Palin)is thinking in a positive direction but I can see where the plan could use some tweaking. I firmly believe Alaska is facing a severe energy crisis with the rising cost of fuel and I think at this stage any plan that is proactive should be considered. Kudos for our govenor to be thinking about the future even if she is coming up with ideas that many consider a bandaid solution. Bandaids are usually the first step in an emergency situation. Sounds like she is doing her part, but we as consumers need to look at what we can do to cut heating costs.
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