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Energy apathy in Anchorage?

Borough Mayor Jim Whitaker, never one to avoid a fight when the opportunity presents itself, says he is not trying to make enemies in Anchorage about natural gas prices.

He’s just trying to get residents of the state’s most populous region to pay attention to energy problems elsewhere in Alaska.

He’s going to get his wish.

Promising legal action about state policies that help allow Southcentral Alaska to enjoy the lowest natural gas prices in the country will be an attention-getter.

Legislators from Wasilla to Kenai and their constituents will be perturbed at his words, but the key to Whitaker’s political calculation is whether their response evolves in the coming days from anger to something more productive.

Whitaker’s letter to Attorney General Talis Colberg, which was copied to the governor, Commissioners Tom Irwin and Pat Galvin and all legislators, raises the question of whether the state is unconstitutionally supporting lower natural gas rates than would otherwise exist.

The mayor told the AG that “we believe it is also likely that your office understands that Anchorage’s privileged position may be constitutionally infirm.” Gov. Sarah Palin has scheduled an announcement Monday in Anchorage about in-state use of natural gas. I don't know what that announcement is about.

Whitaker said he deliberately sent the letter July 3 so that this would not be a media sensation, which is not a bad strategy most of the time. However, since it was sent to a large group of people it became public knowledge right away.

The constitutional question is whether the state must always seek the highest price possible for its natural resources. That line of thinking has led to a situation in which the state aims for top dollar for the royalty oil that it sells to in-state refiners.

Much of that oil is refined in Fairbanks and sold to Interior Alaskans, who are paying world market prices for heating oil and gasoline. Residents of Southcentral are paying world prices for gasoline, but their home heating bills are much lower because of inexpensive natural gas. The state could get more money for its natural gas if it demanded that it be sold for the highest price possible.

As far as I know, the issue has never really been dealt with in detail by the Alaska Supreme Court. Instead, a Superior Court opinion from 1980 offered legal guidance that has been followed ever since, in terms of oil royalties.

It was a political decision by former Gov. Jay Hammond objecting to selling oil at reduced prices for in-state use that prevented a full debate of just what it means for the state to get “maximum benefit” from its resources.

There is an argument to be made that part of the benefit calculation to the people includes a reduced cost of living from the sale of gas or oil.

The letter doesn’t say this, but Whitaker told me today his goal is not to deny anything to Southcentral Alaskans, but to build support in the Legislature for the proposed $20 billion fund for alternative energy projects.

The money is to come from extra oil income over the next five years. The projects would have to be approved by the Legislature.