Concerns about the economy drive Stoltze

Co-chair of House Finance says reduced flow in pipeline, workers losing jobs, companies leaving state, speak to need for tax change

Steve Quinn

For Petroleum News

Resource development costs money — be it oil, natural gas, or hydro — and any policy decision comes before the finance committees.

On the House of Representatives side, some of the state’s heartier energy issues the last eight years have landed squarely before Rep. Bill Stoltze.

First elected in 2002, Stoltze has spent his entire tenure with the House serving on the finance committee.

He sat on the committee when the Legislature passed the Petroleum Production Tax, PPT, in 2006 under Frank Murkowski’s administration.

He served as vice chair a year later when the Legislature rewrote the tax as former Gov. Sarah Palin’s Alaska’s Clear and Equitable Share, ACES.

Now in his second term as co-chair for the finance committee, Stoltze oversaw hearings for House Bill 110, the governor’s oil tax bill.

Stoltze held meetings almost twice daily, even taking the show on the road to Anchorage where leaders from Native corporations, among others, weighed in.

The bill passed the House but is stalled in the Senate, where it has produced some rancor between leading members of the House and Senate over differences about what, if any, changes should be made.

Stoltze, a Republican from Chugiak who has also spent 20 years as a legislative aide, sat down with Petroleum News to discuss the hearings and the progress on resource development during this session.

Petroleum News: The tax issue seems to have been at the forefront since 2005 when PPT was first passed and hasn’t really died down since. What’s your take on that?

Stoltze: I think it was outmoded and out of whack from what our current environment was during the Murkowski administration. None of these debates have been easy politically and they are all politically charged.

But where I’m at right now is probably more important than where we’ve been. I support the ACES revision.

I don’t care how many people you trot in from the Department of Labor and how many studies you present or how many people say the oil industry is going huckly buckly.

It’s kind of simplistic, but as my friend Lee Jordan, who ran the (Alaska) Star for 30 plus years, says, you can read all the crime statistics you want and hear how good things are, but when your reporter is murdered in your front parking lot as his was …

You can have (Labor Commissioner) Click Bishop come and say our economy is rosy, but when I’m watching my neighbors out of work, seeing lack of production and watching companies send their equipment, their apparatus and their employees to North Dakota just to stay alive, you can read all the stats you want, but it seems counter intuitive to what’s really going on.

Petroleum News: What went wrong with ACES? I know some folks believe it was a pile on.

Stoltze: It was a pile on. I’m one of the people who voted for it. I thought we were going to be looking at it as a starting point for negotiating (long-term) fiscal terms for a (large-diameter) gas line. I’ll plead abject naïveté on that. I had better hopes for the process. It did get out of control. That’s one I would take back. That’s why I worked so hard on HB 110. I took that responsibility very seriously. It’s not a slavish devotion. There are all kinds of pejorative, negative comments that have nothing to do with this. It’s about a concern over Alaska’s economy. I’ve seen the reactions some of my colleagues say, that we are trying to enrich the fat cats. It’s not about that.

Petroleum News: What was your philosophy on collecting testimony? You went as far as taking hearings to Anchorage to hear from Native corporations.

Stoltze: They are a big sector of our economy. There were accusations that I was doing a one-sided show. I didn’t know what the ANCSA corporations were going to testify to.

I thought it was relevant to have a big sector of our business economy, our largest land owners, an economic engine of our state, to have a participation on an issue that is about Alaska’s economy.

We had an open invitation for folks to testify. We had a lot of people from the industry testify. We didn’t have a hand-picked list. I know there was a lot of eye rolling by the House Democrats, that it was rigged deal and one-sided. What’s the other side? Who is against Alaska’s economy?

If this was a drug bill, would I feel compelled to bring people who are drug dealers or maybe drug habituating prostitutes to tell the other side why you had to have legal drugs?

The folks who came out and testified in Anchorage, they were big numbers of oilfield support folks. There was great concern about our economy, small business people. They are the ones who feel the pinch first when things are cut back or when things aren’t happening.

Petroleum News: You also gave the minority’s consultant Rick Harper a lot of time one afternoon.

Stoltze: It was way beyond what we had scheduled; we went as long as he needed to go. I asked the House Minority, Les (Gara) and David (Guttenberg, another committee member) is there was anybody you want to bring forward to testify, I want to include them. They said can we get a consultant? Well, I wasn’t hiring any consultants. There are certainly a lot of people with strong opinions; there was a repeated invitation.

I was trying to have a real fair process. I wanted to provide a fair forum for the issues that were laid out. You’ll notice I didn’t debate that much in the process. I had some opinions.

Did I get into the minutiae as much, no. I just tried to be the referee of a fair process.

Stoltze: During the hearings, Admiral (Tom) Barrett’s testimony (on behalf of Alyeska Pipeline Service Co.) was very sobering. Trying to guess what the physics of the pipeline are and what the stress points are, well if you are flying an airplane you don’t want to know how far you can go and still turn back. You want to have a lot of safety factors in there. That’s how I feel about the oil industry. I don’t want to find out how far we can push them. One of my colleagues on the finance committee said, ‘I want to take them to the last nickel and pull back.’ I’m not sure we have that option. I don’t think that’s a realistic stress point to push. That might be a nice populist appeal, but I don’t think it’s economically realistic. It doesn’t recognize the realistic points of business and economics.

Petroleum News: How do you separate populist appeal, which is what drove ACES, from policy?

Stoltze: It’s tough. There are people who are my supporters who have questioned my position on this. There have been accusations that I’ve sold out. I didn’t get into this line of work for money. It’s the worst economic decision I’ve made. I do have legacy responsibilities. What I do and what I leave behind weighs heavily on me. You always have to look at what the popular public opinion is. But popular public opinion doesn’t fuel our economy.

Petroleum News: Let’s switch gears to a gas pipeline. What concerns do you have about the prospects of a large-diameter pipeline coming together and moving forward?

Stoltze: I’m worried. I was a no-vote on the AGIA licensing, but the Legislature has approved this process and we have to be very careful about how we try to we get out of this. The state has contractual obligations to uphold and they have to defend those. Whether it’s the right or the wrong process, it’s real tough to make a political decision and redirect the AGIA process, but I’m not real optimistic about it. I would love it to work, but I just don’t see it.

Petroleum News: What’s missing to make it work?

Stoltze: The change of economics, the availability of shale gas, the abundance of other gas, the lower prices worldwide. What price were we talking about when Murkowski’s plan was being debated (between $7 and $8 per thousand cubic feet), but now it barely covers tariff. Then it gets into populism and political rhetoric with people saying we need to do the big line through the AGIA process. We get into this political rhetoric that the grudges and vendettas drive so much. There is an anti oil populism. You don’t have to love the oil industry any more than the insurance industry but you’ve got to recognize they are an important part of our economy. They make decisions based on economics.

Petroleum News: What kind of work would you like to see done during the interim?

Stoltze: Well we are working on an in-state gas line. I support (House Speaker) Mike Chenault’s efforts. I’m concerned about the gas supply in Southcentral, especially people in my legislative district and my colleagues’ legislative districts in the valley who are at the end of the supply line.

Petroleum News: What about hydro, and the advances the Legislature made toward funding projects like Susitna this session?

Stoltze: I’ve got to give a lot of credit to the Ratepayers group for putting in a ton of work working with Sen. McGuire’s office and (Reps. Energy Committee co-chairs) Lance Pruitt and Neal (Foster’s) office. Lance was very mature with this. He brought in Sen. (Joe) Thomas for hearings and invited him to testify on the governor’s bill. That doesn’t happen very often around here: inviting others regardless of who gets credit. He didn’t care about the limelight; he cared about the issue. He recognized this is not a partisan issue. Lance viewed this as one of the critical issues; let’s gets as many people together respective of party or where they are sitting on the bicameral process.

Petroleum News: Does this debate remind you the PPT debate?

Stoltze: Not at all. In some ways it’s a lot more orderly process, at least on the House side. I don’t know that there has been any kind of process on the Senate side. I’m not sure how (Labor) Commissioner Bishop adds to the debate.

Petroleum News: Back to oil tax. It’s not on the special session call, so what would you like to see done during the interim?

Stoltze: This latest thing about doing a labor study, that doesn’t impress the heck out of me. You don’t need to listen to a weather report to find out what it is if you just look out the window to see it’s raining or snowing. Anybody who watches our economy can see that it’s not as robust.

It’s not an inherent trust or love for industry on my part. They are an important part of our economy; they provide the jobs in our communities.

I don’t think they make decisions based on malice. Politicians make decisions based on malice and grudges. The industry makes purely business decisions. For us to act otherwise …

I would like us to take into account what’s not happening in the oil industry. A lot of these investment decisions need to be made sooner rather than later. This is an issue where the longer we wait, the worse off we are.