A big loss for Alaska. AK budget brawl makes case for spending cap.

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Today’s Key Takeaways:  African leader cautions against hasty end to fossil fuels that will hurt their economy. NOIA calls out Biden for cancelling lease sales, hurting Americans. EU leaders draft guidance on Russian gas payments. AK legislators budget antics highlight need for spending cap.


Angolan leader urges Africa to avoid hasty end to fossil fuels (worldoil.com)
Candido Mendes, World Oil, May 16, 2022

 African nations should resist pressure from “powerful interests” to hastily abandon fossil fuels to avoid hurting their economies, Angola’s President Joao Lourenco said.

Since the COP26 climate summit in Glasgow in November, pressure has been building on African countries to shift to cleaner energy sources to avoid catastrophic global warming. 

“More than 125 billion oil barrels and 500 trillion cubic feet of gas in Africa may go forever untapped if the continent yields to foreign pressure to adhere to the energy transition,” Lourenco said at an industry conference in Luanda, the southern African nation’s capital, on Monday.

Angola’s leader is one of many on the continent that believes their country has a right to benefit from its natural resources and that western nations are responsible for the vast majority of emissions.

Shifting to a low-carbon economy should be “gradual and responsible,” Lourenco said. 

Africa’s second-largest oil producer relies on crude for 95% of its export revenues. “Saving the planet shouldn’t bring more hunger and misery to the people of countries that depend on oil revenues,” he said.


No Offshore Oil Auctions Devastating To Americans, NOIA Says
Bojan Lepic, Rigzone, May 16, 2022

NOIA President Erik Milito has issued a response to the decision not to move forward with planned GoM and Alaska oil and gas lease sales.

National Ocean Industries Association President Erik Milito has issued a response to the Interior Department’s decision not to move forward with planned Gulf of Mexico and Alaska oil and gas lease sales.

Last week, the Biden administration scrapped planned auctions of drilling rights in the Gulf of Mexico and Alaska’s Cook Inlet in a move that deepens uncertainty over the future of the U.S. government’s offshore oil leasing program.

The Interior said that it would not move forward with two Gulf of Mexico lease auctions planned under former President Barack Obama due to conflicting court rulings regarding the auctions. The department’s justification for the Alaska lease auction cancellation was a ‘lack of industry interest in leasing the area.’

The previous five-year plan ends on June 30 and Interior Secretary Deb Haaland claimed that a new one is unlikely to be in place when the current program expires. The Biden administration also doesn’t anticipate selling more oil and gas leases in the Gulf of Mexico through at least October 2023.

In response to the decision of the Interior Department, a not-so-surprised NOIA president Erik Milito made the following statement.

“This decision is not surprising at all. As early as March 2020, then-candidate Biden made it clear that he would stop federal oil and gas development if elected. This was followed by additional formal campaign declarations, a pause on federal leasing that continues today, and continued statements by the Administration that it is their intent to stop additional federal oil and gas development.

“The Administration absolutely has the ability to hold these lease sales. They also have the ability to prepare a new leasing program for the 2022-2027 program. This has been proven by the actions of all past Administrations, including the Obama White House.

“These decisions are devastating to Americans. Restricting American energy development will quite simply lead to reduced American supplies, higher prices, lost investment, destruction of high-paying jobs throughout the country, harmful geopolitical consequences, and a reversion to dependency on foreign suppliers – such a Russia, Iran, and China – with little interest in reducing emissions and protecting workers and the environment.

“The adverse consequences of the explicit decision to suspend U.S. oil and gas development are being felt in a very hard way by everyday Americans and by our allies around the world,” Milito said.


From the Washington Examiner, Daily on Energy:

GUIDANCE ON MAKING PAYMENTS FOR RUSSIAN GAS: Meanwhile, EU leaders drafted guidance this weekend on Russian gas payments, seeking to add clarity within the bloc and help members avoid any possible sanctions violations as they continue to import Russian gas.

News of the draft guidance was reported by Bloomberg, and comes after Putin issued a decree ordering all “unfriendly nations” to begin paying for their gas in rubles at risk of getting cut off. Kremlin officials said countries could make payments in euros or dollars to its state-owned bank, Gazprombank, which it would then convert to rubles; but the EU had stopped short of saying whether making those payments would amount to a breach of sanctions.

EU leaders sent a copy of the revised guidelines to member states Friday, a spokesperson told Bloomberg, which told utility companies they should “make clear” in a statement that they consider their obligations fulfilled by making payments in euros or dollars.

EU sanctions “do not prevent economic operators from opening a bank account in a designated bank for payments due under contracts for the supply of natural gas in a gaseous state, in the currency specified in those contracts,” the commission said. “Operators should make a clear statement that they intend to fulfil their obligations under existing contracts and consider their contractual obligations regarding the payment already fulfilled by paying in euros or dollars, in line with the existing contracts.”


Joe Usibelli Sr., longtime head of Usibelli Coal Mine, dies at 83
Alena Naiden, Anchorage Daily News, May 15, 2022

The chairman of Alaska’s only operating coal mine and a pioneer of the industry has died at age 83.

Joe Usibelli Sr. died Thursday after an unspecified long-term illness, according to his company. He was in Tucson, Arizona, with his wife Peggy Shumaker, according to the company’s announcement.

Born in Suntrana, near Healy, Usibelli was 25 when his father, Emil Usibelli, died unexpectedly in 1964. Joe Usibelli Sr. found himself in charge of the company that now supplies about 1.2 million tons of coal per year, according to the Department of Natural Resources. During his career, Usibelli modernized the mine’s equipment and introduced new mining techniques.

“My dad was a visionary and a pioneer in Alaska’s mining industry,” said a statement from Joe Usibelli Jr., who has been the president of Usibelli Coal Mine since 1987. “He was known for his ingenuity, generosity, and his deep love for his family, employees, and community.”

Charlie Boddy worked with Usibelli for 40 years before retiring as a vice president of governmental relations. He said that Usibelli was a mentor to him, who showed him that leadership also means listening, challenging, and helping your employees.

“No matter what your job was, no matter what you were doing, he was always, always looking for a way that you could do your job better, that you could help the company,” Boddy said. “He is without a doubt one of the kindest people I’ve ever known in my adult life.”

Besides serving as a president of the company and then chairman, Usibelli was known for his philanthropy and contributions to the University of Alaska. He and his family helped with fundraising for the University of Alaska Museum of the North addition and with renovating the Gallery for Alaska. The Usibelli Foundation and the members of the Usibelli family donated more than $8.5 million to the university through scholarships, faculty awards and capital projects, University of Alaska President Pat Pitney said in a prepared statement.

“You give back. You have to,” Usibelli said to the University of Alaska in 2011. “Either that or you’re not doing it right.”

Details regarding Usibelli’s funeral are to come.


Alaska House rejects $5,500 payout, sends budget to negotiating committee
James Brooks, Alaska Beacon, May 14, 2022

After three days of delay and doubt about the outcome, the Alaska House of Representatives turned down a Senate-written budget containing $5,500 payments for eligible Alaskans. Those opposed to the budget cited concerns about spending exceeding revenue.

The House’s 18-22 vote against the Senate proposal means two different plans will now go to a six-member committee assigned to craft a compromise that can pass both House and Senate.

Speaker of the House Louise Stutes, R-Kodiak, told reporters after the vote that it means Alaskans should not expect a $5,500 payment this year.

Other legislators said the final budget details are uncertain.

“This budget, regardless of the outcome today, is still a work in progress,” said Rep. Sara Rasmussen, R-Anchorage, who voted in favor.

The Senate proposed hundreds of millions of dollars in spending on Anchorage’s and Nome’s ports, plus millions more on projects across the state, but it was a proposed $4,200 Permanent Fund dividend and an additional $1,300 energy payment that dominated discussion.

“I think the main sticking point here between the two budgets is the size of the dividend,” said Rep. Ben Carpenter, R-Nikiski.

Largest budget item

The payments’ combined cost of $3.6 billion was the largest single item in the Senate proposal. That cost, combined with other spending, would have resulted in the largest budget in state history.

Despite an expected multibillion-dollar windfall in oil revenue because of high prices caused by the Russian invasion of Ukraine, the budget would have resulted in a deficit of about $1 billion, requiring the state to spend from savings to close the gap.

Even as individual Alaskans wrote their lawmakers in support of the $5,500, other Alaska residents, plus business and labor groups, lobbied against the Senate budget. 

The AFL-CIO and the Alaska Chamber opposed it, as did the Anchorage Economic Development Corp., Alaska Miners Association, Associated General Contractors, Council of Alaska Producers and the Alaska Support Industry Alliance.

“A concurrence vote for the Senate budget is not conducive to a long-term, sustainable fiscal plan,” the latter groups wrote in a combined letter.

The leaders of the Senate and House majority and minority caucuses met with Gov. Mike Dunleavy earlier in the week. Several attendees said the governor told them he would veto about $1 billion from the budget — including the $1,300 energy payment — if House lawmakers agreed with the Senate plan. Doing so would have eliminated the deficit within the budget. Now, House and Senate negotiators could eliminate the deficit themselves. 

Payment supporters cite high fuel costs

Rep. Tom McKay, R-Anchorage, voted in favor of the Senate plan. He acknowledged the lobbying, some coming from within his own district, but said he wanted to take a statewide view.

He and others said the price of home-heating fuel and transportation gasoline requires that the Legislature make an extraordinary effort to distribute money to Alaska residents.

Rep. Ron Gillham, R-Kenai, said that when he comes into work at the Capitol, he frequently passes someone sleeping on the sidewalk.

The difference between $5,500 and $2,600 — an amount previously approved by the House but rejected by the Senate — could be the difference between getting that person off the street or allowing them to keep sleeping there, he said.

“If I can help that one person, it’s well worth it,” he said.

Lawmakers who spoke in opposition cited the risks of the proposal. If oil prices in the next fiscal year are lower than the $101 per-barrel average predicted by the state, the state’s savings accounts could evaporate, forcing lawmakers to spend more from the Alaska Permanent Fund.

Because the Permanent Fund’s investments provide between half and two-thirds of the state’s general-purpose revenue, overspending could create deficits in the future, encouraging significant budget cuts or tax increases.

Rep. Bart LeBon, R-Fairbanks, was a banker for decades before joining the Legislature. He said that if a business came to him with a business proposal akin to the budget, he wouldn’t approve their loan. 

“This budget, from the other body, does not balance,” he said.

Members cross caucus lines

The final vote crossed party and caucus lines: Four members of the House’s majority coalition voted in favor of the Senate budget, and three members of the House minority voted against it, as did Republican David Eastman, R-Wasilla, who isn’t a member of either caucus.

Stutes appointed Rep. Kelly Merrick, R-Eagle River; Rep. Dan Ortiz, I-Ketchikan; and LeBon to the budget conference committee assigned to negotiate a compromise. All three voted against the Senate version of the budget.

She skipped Rep. Neal Foster, D-Nome, who is co-chair of the House Finance Committee. Foster voted in favor of the Senate’s proposal.

Meeting later Saturday, Senate President Peter Micciche, R-Soldotna, appointed Sens. Bert Stedman, R-Sitka; Click Bishop, R-Fairbanks; and Bill Wielechowski, D-Anchorage, to the conference committee. Wielechowski voted in favor of the $5,500; Stedman and Bishop were opposed.

Stedman said the conference committee will have its first meeting at 3 p.m. Sunday.