Wednesday, August 7, 2013

The @AlaskaDemocrats' talking points need a lot of work ...

As the SB 21 debate matures we should expect both sides to start ramping up their talking points.  I ran into some from the @AlaskaDemocrats over the last few days on twitter.  If those points are indicative of the level of analysis the party intends to put into the effort, this is going to be a low quality debate.

Keep in mind when reading the following string that crude prices averaged in the $40's from 2000 - 2007, when ACES was enacted, and since then have averaged in the $90's, more than double.  Following price, industry activity was slow earlier in the decade, and then started to ramp up in the mid-2000's.  It wasn't until 2009, for example, that the New York Times led with the headline "Oil Industry Sets a Brisk Pace of New Discoveries."

As the following discussion demonstrates, the Alaska Democrats apparently think that the proper method of assessing the success of ACES is by comparing various measures of Alaska activity from the latter half of the decade, once ACES was enacted, against the first half.  Its not.  The proper method is to assess whether Alaska activity kept pace in the latter half of the decade with the increase the industry experienced overall.  It didn't.  As I said in a 2009 commentary on the situation -- the very first post on these pages -- "[t]o put it bluntly, for the past several years, Alaska’s exploration signals to the industry have said 'go elsewhere'.”

At the end of the string, the Alaska Democrats also make the argument that current levels of profitability "are the most accurate measure" of competitiveness.  They aren't.  Current levels of profitability are a scorecard which measure the results of past investments.  The competitiveness of future investments are determined based on forward looking assessments of required new investment levels, anticipated revenues and costs.  Those factors aren't incorporated at all in quarterly or annual profit statements.  Instead, quarterly and annual earnings statements are, in essence, history books.

Clearly the Alaska D's need to add someone actually familiar with oil economics to their team.  That will severely reduce the number of arguments they raise, but will lead to a higher quality debate.  Otherwise, its going to be a long, long year from their side with very little of substance to show for it.

Here is the string:

@AlaskaDemocrats:  Casey Reynolds: "We're spending our nest egg...especially with the oil tax provision we're going to be out of money." Agreed. @KFQD #akleg

@bgkeithley:  Then do AK D's agree to limit spending to $5.5 B? @AlaskaDemocrats: "We're spending our nest egg... Agreed." #akleg #akfiscal

‏@AlaskaDemocrats:  @bgkeithley Legislators will make those kind of specific policy decisions. #Alaska Democrats have a good record of fiscal prudence.

@bgkeithley:  "@AlaskaDemocrats have a good record of #AKfiscal prudence." Comedic interlude? AKDs have voted for the same unsustainable budgets as R's.

@AlaskaDemocrats:  @bgkeithley Credit where credit is due: The ACES era put billions into savings, and we'd be much worse off today but for that.

@bgkeithley:  #AKfiscal AK is worse for ACES; lower production, lower revenue, higher spending @AlaskaDemocrats: Credit where credit is due: The ACES era.

@AlaskaDemocrats:  @bgkeithley Actually TAPS decline slowed under ACES while # of oil companies, oil jobs, and oil capital investment grew.

@bgkeithley:  @AlaskaDemocrats Silly. Valid comparison is v. what would have happened as oil prices rose; AK lost ground v. industry ave. #AKoil

@AlaskaDemocrats:  @bgkeithley How can you say we lost ground when there was more exploration, more companies conducting exploration, more oil jobs...

@AlaskaDemocrats:  @bgkeithley ...and major new areas like Chukchi and CD-5? That's progress, not losing ground. [BGK comment: they apparently forgot the Begich talking points the first time]

@bgkeithley:  #AKoil @AlaskaDemocrats All areas had activity, the question is did Alaska hold its own relative to peers. The answer is no, lost ground.

[@Jordan_E_Engel:  I love tweets by @bgkeithley. Nice to see someone on twitter using real, defensible arguments regarding oil tax and spending in Alaska.]

@AlaskaDemocrats:  @bgkeithley CP's latest financials show we remain competitive as measured by profitability, which is the most accurate measure

@bgkeithley:  @AlaskaDemocrats Current profitability reflects past investments. It has nothing to do with competitiveness for new investments #akoil