Fairbanks borough mayor accuses state of favoring Anchorage on natural gas rates
Originally published Friday, July 4, 2008 at 4:33 p.m.
Updated Saturday, July 5, 2008 at 12:00 a.m.
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Stumble It!FAIRBANKS — The Fairbanks North Star Borough could pursue legal action against the state for failing to solicit the best possible price for Cook Inlet royalty gas — a situation that borough Mayor Jim Whitaker claims favors Anchorage-area residents and could even be unconstitutional.
In a letter sent late Thursday to Attorney General Talis Colberg, Whitaker threatened future legal action unless the government is more equitable in addressing the energy needs of the entire state. Copies were sent to Gov. Sarah Palin, Department of Natural Resources Commissioner Tom Irwin, Department of Revenue Commissioner Patrick Galvin and state legislators.
Whitaker said Friday that the letter is not intended as a threat but as a response to actions the state has already taken. In it, he alleges the state has acted unconstitutionally by interfering in natural gas tariff and export issues in a manner that keeps prices low for Anchorage-area users. In contrast, state officials have repeatedly driven home the point that the state requires them to get the most revenue it can from Alaska’s oil.
Any position the state takes that keeps rates lower for Anchorage-area residents could be considered unconstitutional, Whitaker claimed, because it favors one part of the state over another and neglects to elicit the best price possible for state minerals.
“Fairbanks residents are distinctly disadvantaged by the state’s approach to Cook Inlet gas,” the letter states. Unless that situation changes, Whitaker said, the borough will pursue legal remedies such as intervening in regulatory and export cases, challenging state positions as unconstitutional and more, all designed to maximize the state’s financial return on royalty Cook Inlet gas.
Whitaker said that as an alternative to legal action, the borough would consider mitigation of the unfair practices through the establishment of a $20 billion fund to pay for alternative energy projects across Alaska, including the coal/biomass-to-liquids facility proposed by the borough and the Fairbanks Economic Development Corp. The facility would be located near Eielson Air Force Base.
The governor’s office announced late Thursday afternoon that Palin would make an announcement about in-state natural gas at 1 p.m. Monday. It is unclear whether the announcement will be in response to Whitaker’s letter.
The governor’s spokeswoman was unavailable for comment on Friday due to the holiday.
Whitaker said he can do little about the state’s royalty gas prices but that he can “insist that we be treated the same as other communities.” He said Fairbanks will draw partners from the Bush and Southeast in the call for equitable energy solutions. All the state needs to agree to, he said, is to establish a fund from budget surpluses that every community in Alaska could access equally.
“It mitigates the damage we think is inherent in an unconstitutional policy,” Whitaker said.
Whitaker and House Speaker John Harris, R-Valdez, recently announced a proposal that would add billions to a $250 million renewable energy fund lawmakers have promised. Also under their plan, projects involving synthetic fuels made from coal, biomass and natural gas would become eligible for funding.
The proposed Fairbanks plant would make liquid fuels from coal and biomass, Whitaker said. Construction costs could range from $500 million to $2 billion. Whitaker said he would only ask the state for an initial investment of around $150 million to get the project off the ground.
Community Discussion
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It's about time a local leader said something about Anchorage beimg treated so well. Have we ever heard JAYBIRD say the same? I am a registered republican, but this year any Independent candidate for the state house or senate will get my vote. Thank you Mayor for doing something our Reps. and Senators are too spineless to do!
Way to go Mayor Whitaker! I was at the "Energy Rally" at the Carlson Center, and our Mayor made a compelling, well researched case for Interior and Rural Alaska energy problems. I have had enough of being treated like second class citizens when our neighbors in Los Anchorage get preferential treatment. ENOUGH! This announcement will help drive the point home, and I know he will get plenty of support from us in the FNSB.
We have a not notch team looking out for our interests, and indeed our very survival. If the energy crisis is not tackled effectively, and quickly parts of Alaska will become a ghost town. I know I will be gone.
Wish Mayor Whitaker would have taken a little different approach, as this direct assault sound a little like "extortion", "quid-quo-pro" or some other fancy name.
It is true that South Central has been given preferential treatment in Cook Inlet gas prices for a number of years, BUT the goal should be to reduce the energy cost for ALL ALASKANS throughout the state.
arcticracer: Understand your frustration of being treated like second class citizens from our neighbors in "Los Anchorage" and "Mecca Juneau". But in the past, FNSB hasn't exactly been a "fountain of sympathy" for the third class citizens in rural Alaska.
Your correct that, "If the energy crisis is not tackled effectively and quickly, parts of Alaska will become a ghost town." It is already happening. The problem is as more people escape Interior Alaska, less representatives in the Legislature, hence less State funding until the point they lump you in with some Southeastern communities for your district and don't give you any funding at all.
Come on ALASKA lets pull together and get things done. Now somebody explain to me why Interior and Western Alaska can't have reduced State surcharge on heating oil, that is produced right here in Fairbanks???
I support the mayor in his quest for equal treatment of the interior
Didn't the borough assembly just grant this mayor access to borough money outside the overview of the assembly due to "emergency status." Exactly who is paying for all of this and who is keeping tract of what he is spending.
Wasn't he quoted as saying he would ask for a fraction of money from the State for syn gas, then asks for $150 million. What type of a small fraction is $150 million.
Exactly what is going on here. Note if the best prices possible for State minerals is brought in as he wants, wouldn't that mean the gas would be sold outside of the State on the world market, so much for "cheap gas for Fairbanks or Alaska."
What about the consultant's report on the cost and viability of syn gas. Isn't it due or will the public not see it. Seems like he is in a big hurry before the report has even been made public.
The public has a right to the whole story. There are just too many unanswered questions. Exactly who authorized this man to do what he is doing, or again does he feel that because of the emergency being called he does not have to be held accountable to anyone.
Hold on Fairbanks and the North Star Borough, we may be in for a ride of a lifetime. Wonder what the Governor is going to say on Monday. This ought to be a interesting.
About time someone strapped some b@##s on to come up with a solution to provide equitable energy for all of Alaska. Anchorage has enjoyed low heating and electric rates because of the low-cost Cook Inlet oil since the 50's and as far as I can see, don't seem too worried that the rest of us are paying outrageous costs for heating oil and electric costs.
As for a different approach, nothing seems to have worked so far as many of us have asked for the same sweet deal in obtaining royalty oil at a reduced price. Maybe when Anchorage has to pay the price we are paying, a fast, easy and non-taxed solution will be forthcoming.
I agree with the Mayor totally. We are in dire straits even though we are in an area of abundant resources and our State coffers are bulging. An insane situation! All Alaskan legislators need to see to it that all Alaskans are treated equally. The big oil money comes from the northern part of the State and it is for all Alaskans, including Anchorage. Either we all pay the world market rates for our resources, or none of us do. He said the letter was not a threat, but it certainly got the point across. It is far better to arrive at a situation where we all get cheaper fuel versus handouts, because we would pay taxes on those handouts. Where would Anchorage be if the northern half becomes the State of North Alaska ? That is not a threat... just trying to get the point across. :-)
Let me get this straight.
Anchorage gets cheap, Alaska- subsidized natural gas.
Fairbanks gets no subsidy for the most expensive fuel oil in the USA. (Outside of rural Alaska).
Palin's idea of an "energy plan" is to give every resident of the State $1,200 bucks- even if they already have cheap heat.
Alaska is divided as it has never been in our history. Anchorage only cares about Anchorage- to hell with everyone else. The North Slope only cares about, well, the North Slope. Southeast only cares about... well, you get the idea.
Kick their ass, Mayor Whitaker. It is about time we had someone from the Interior with the moxy to stand up for us.
Where is the Interior delegation? Sleeping? What solutions do we have from Kelly, Kawasaki, Ramras, Therriault, Wilken, Coghill? Guttenberg? Hello???
And where is Sarah Palin? Her energy plan is not equitable. Worse, the 200 gallons of fuel oil it buys does not even close to solving our energy crisis.
WTG Jim Whitaker !! Sometimes the truth hurts, but the truth must be spoken. For far too long we Fairbanksans have paid the highest fuel costs in the nation. WHY? The pipeline runs right through our city. There's a refinery right down the road.
Insane? Oh yeah,
Let's see what the Governor has to say on Monday. Should give us the answer to the Mayor's knee jerk reaction.
One thing, don't ever forget that these guys, even the Governor and the Mayor are part of the Republican Party of Alaska. Even making nice with Ted Stevens. They haven't become social democratic in their party philosophy. If you really want social programs then the Democratic Party are the ones who do that best. Republicans are big business oriented, Democratic Party are people oriented. The change needs to occur on local, State and National levels. Are you willing to vote these people out in order to start the change. Then will you be willing to give more of your personal income for it. At least the Dems tell you to your face they will raise your taxes to give you these programs.
By the way,Anchorage has had subsidized gas for how many years, why wasn't Fairbanks complaining back then. There is a lot more to this story than the mayor is saying. He's playing on people's emotions again to get everyone worked up.
It's a risky strategy directly baiting SC and pitting different segments of the population against each other. Who knows where this could go. Proceed w/caution.
This could be orchestrated by the Mayor and the Governor. They are pretty good friends, with mutual politics. I can only hope. This could be cover for some announcement by Palin on Monday. A way to explain to the SC voters that all is not well in the rest of Alaska. A way to justify to SC voters some targeted state spending that might benefit the Interior.
Pure speculation on my part, I admit.
glacierles: Good point you bring up. I am still not sure that Southcentral even knows there are problems with energy in other parts of the state. I do not like Palin's proposal for giving everyone $1200 for energy costs. Hell, families in Anchorage could go take a Hawaiian vacation with that after paying their small gas bill while in Fairbanks or Arctic Village we will be wondering how we will pay the other 6 months of oil costs. I have lived here a long time, and it has always been "Anchorage-and the rest of Alaska". The power is there, the population is there, the votes are there, everything is there. Monday should be interesting, I think Palin realizes the gravity of the situation and will come up with a way to save Alaska's (outside of the low cost energy areas) future with short term assistance to this crisis. The current plan simply further perpetuates the multi tiered inequity of energy costs in the state.
On August 1, 2008 most of the world will experience a total eclipse of the sun. To bad the US and Alaska will not experience it. A total lack of solar energy, may help people think more deeply about this whole energy situation the world finds itself in. Selfishness and threats are a waste of the ability and human energy to negotiate a outcome that benefits all. It is time for them to grow up, realize they can not change the past and actually work with people to develop some solutions. We should have had more news coverage of information from the experts, not the politicians. The type of power the politicians seek has nothing to do with heating your home this winter.
Your mayor raises a very good point. I'm from Southeast, but our smaller rural communities, like bush Alaska don't receive low cost energy rates.
None of our towns enjoy preferential natural gas rates that Southcentral has realized for decades. Keep going mayor, you're on to something!
Immediate Energy Cost Relief
1. Implement a fuel cap program and sales tax relief:
1. An Alaska State Royalty Oil In-State Use Program which would use Alaska State Royalty Oil , be refined at Flint Hills and the fuels be sold to Alaskans at no more than $2.00 a gallon. The idea is to keep fuel costs the same for every community in Alaska and keep the Flint Hills refinery operating which provides 155 jobs in Fairbanks, 25 jobs in Anchorage and millions into each economy.
2. A State Sales tax waiver reimbursement program for communities that tax fuel and electricity.
Anything short of stabilizing our fuel costs is only a very short term remedy. We need to have our state give us what is ours, that is $2.00 a gallon of all fuels from the money from high crude oil prices. Low cost fuel should last as long as crude oil is above $100 a barrel.
Oregon gives back all surplus funds back to the people. That should be our policy in Alaska.
Oh forgot this. Rural Alaskans with the $1200.00 payment per pfd recipient should buy themselves a one-way ticket to Anchorage - that way they'll have an escape route from higher prices.
Anchorage will then have some empathy - with so many energy refugees in town, they'll be overwhelmed. Maybe that will get our state leaders attention.
Woodman "By the way,Anchorage has had subsidized gas for how many years, why wasn't Fairbanks complaining back then?"
Lay historical price graphs of Anchorage subsidized gas along Fairbanks heating fuel. Question answered.
Oldminer: Show us these graphs or link to the sight we can see.
BigMike thank you for pointing out the column. It also said the money for the fund would be from high prices surplus for the next five years. So his plan appears to be years away. It does not look like there is the fix it today solution many are seeking.
Sambam DITTO!!!!
I think that the "heating oil aid" should be based on the oil cost in each borough- that wasy it would appear to be more equitable. If one lives in a borough where they traditionally pay more for oil or electric bills, they should get more help. How hard can it be? I have nothing to say about the Mayors letter- they do things for reasons that we do not understand, and nothing we see "on the face of things" is really what it ever is behind the scenes.
"We're going to sue you! We're going to harass you! We're going to protest against you! Of course, if you help my friends and me get this $20 billion project going we'll just forget about it. Sounds almost like a New Jersey protection scam. A good question some have asked - who will be the CEO, Treasurer, etc., etc., of this new $20 billion entity who gets it's start on a non-competitive basis? Bet I can name a few. Looks like Big Mike can too. Can you?
And oh, by the way, a lousy $150 million in seed money from the state is nothing in comparison to the $500 - $850 million (after trebble damages) the state is begging Trans Canada to take to maybe build a gas pipeline when the Denali group is committed to build the pipe without any subsidy. A hundred million here, a hundred million there for private projects and I - like all of you - am still paying world market prices for heating oil.
Like I said, Whitaker is lining up his next job. The Port Authority got him no where and he is term limited. Why did he sell out his business interest in Fairbanks. You are right, when it comes to job placement. Just look at his former assistant and the series of jobs she got from him. The one paid employee of the Port Authority.
Whitaker is still part of the republican party I just hope the Governor is watching her back with this man and his group of hanger ons.
Check it out very carefully. A Republican supports Republicans. Take a look (APOC web site) and see who the Mayor (and his wife) have supported financially. To real Republicans the Mayor is a RINO (Republican in name only)! His record is clear and they know it.
How about some numbers.
July 2nd Henry Hub Natural Gas - $13.31 per Mbtu.
Anchorage Natural Gas price - $6.87 per MCF.
http://www.enstarnaturalgas.com/CompanyI...
I don't know the exact BTU's for Cook Inlet gas, but it puts Anchorage prices at less than half of the US price. This would be like selling crude to the refinery at $70 a barrel.
The equivelent cost for heating your house in Anchorage would be having $1.05 a gallon heating oil. It is no wonder that Anchorage does not see an energy crisis. I know several people with large homes in Southcentral that have monthly gas bills in the winter of $100-$150.
As of today, Sunday, this story has not even MADE THE ANCHORAGE NEWS !!!
No one outside of Fairbanks considers this news worthy enough to report.
Just another stupid idea of the Mayor's like the Port Authority . He will drop this like a "hot potato " just like he did the Port Authority
when it too went no where.
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