The Big G.O.P.: the Big Gas and Big Oil Party

G.O.P. Chair Frank McQueary Embarrasses Himself

G.O.P. Chair Frank McQueary Embarrasses Himself

WC knew that the Republican Party in Alaska was deeply in the pockets of Big Oil. But the extent of Big Oil’s ownership of the G.O.P. wasn’t completely apparent until the Alaska G.O.P. Chairman, Frank McQueary, wrote his opinion piece for the Anchorage Daily Dispatch yesterday. The G.O.P. has sold its small, mean soul to Big Oil. It’s so clear that you’re only left to wonder what the sale price must have been.

Think WC is exaggerating? Let’s parse McQueary’s article.

McQueary first accuses Governor Walker of wanting to impose a “punitive tax” on undeveloped natural gas reserves. It’s an incentive tax, of course. It’s only “punitive” in the sense of any tax if the natural gas is left in the ground instead of being drilled and shipped. And if Big Oil – which owns most of the North Slope gas leases – finds the tax burdensome, it can simply surrender the leases and the state can lease the reserves to someone who will develop them. McQueary is misleading readers with the “punitive tax” boogeyman.

But McQueary is just getting warmed up. Next, he launches into an extended straw man argument. Gas, McQueary says, has been used to extract more oil from the North Slope by reinjection. The implication is that natural gas reserves have been used productively. Piffle. The gas that has been reinjected is present in the crude oil, like carbonation in soda pop. It’s a minor byproduct. Outside of Barrow, which powers and heats its community with natural gas, no one on the North Slope has drilled for natural gas. That’s Governor Walker’s point, of course. The natural gas that has been reinjected is a miniscule fraction of the reserves. McQueary implies drilling for natural gas will hurt oil production. Nonsense. It’s untrue, and he knows it. McQueary even waves the permanent fund dividend flag in his argument, as if PFDs had anything to do with drilling for natural gas. PFDs are income from money in hand. It’s a pure scare tactic, another boogeyman argument.

Next McQueary descends further into nonsense by blaming Shell Oil’s departure from the Chukchi and Beaufort Seas on over-regulation of the industry. That’s a double boogeyman. First, Shell left because it didn’t find oil. Not because of regulations. If McQueary reflected for even a minute on Shell’s record in its drilling attempts in the Arctic he’d recognize that regulation is absolutely necessary given the Keystone Kops efforts of Big Oil.

Second, Governor Walker is talking about an incentive tax to encourage drilling and development of natural gas, not regulate against oil. McQueary has the wrong fossil fuel and the reverse of the incentive. It’s astonishing to WC that the G.O.P. is so desperate to attack Governor Walker that it can’t muster a rational argument.

Next McQueary argues,

Here’s the reality Walker can’t seem to grasp: If companies can’t make it economical to produce energy, they shouldn’t produce it, because it means the market is not ready for the commodity at the price at which it would need to be sold.

There’s an amazing amount of ignorance, slander and deception compressed into that single sentence. It starts with an economic truism – the cost of goods sold cannot exceed the market price – but takes it as given that the premise has any application to North Slope gas. McQueary doesn’t bother to provide proof of the premise because he doesn’t have any. And like all economic truisms, it’s an oversimplification. Big Oil prefers to operate at an obscene profit, thank you very much. You only have to look at their returns on North Slope crude oil to see that. “Economical,” in Big Oil terms, means not financial economy but at a ridiculous profit. And the profits on crude oil, even on the declining production of the North Slope, are much, much higher than they ever would be on natural gas.

McQueary seems to be working for Big Oil, not Alaskans. Governor Walker, who has worked for a natural gas line for Alaska for decades, understands the economics of natural gas. Certainly better than McQueary, who can simply parrot Big Oil’s talking points, while slandering the Governor in the process.

But wait, McQueary isn’t through slandering the Governor.

The irony is his actions take our destiny out of our hands, because companies, in and out of the oil patch, are rightfully worried due to the governor’s unstable and ever-changing decision-making.

A gas reserves tax perpetuates a downward spiral of Alaska’s economy. The governor should back away from this proposal soon, rather than risk Alaska’s future.

“Unstable and ever-changing decision-making”? The last three changes in Alaska’s oil and gas tax structure have all come from Republican administrations. Governor Murkowski’s corrupt tax structure, purchased by Veco and Bill Allen? Republicans. The Quitter’s ACES? Republican. Governor Parnell’s SB 21 tax giveaway? Republicans again. You want “unstable and ever-changing,” Mr. McQueary? Try a mirror. Bad gas line deals? The horrible agreement with TransCanada? You still need the mirror.

The Republican party chair closes with a completely unsubstantiated claim that “A gas reserves tax perpetuates a downward spiral of Alaska’s economy.” He doesn’t trouble to provide any evidence for that claim. And nothing in his preceding rant is evidence for that conclusion. As WC said earlier, it’s ignorance, slander and deception.

But his rant is crystal clear evidence of one thing: Big Oil owns the Alaska G.O.P.