The Weekly Top 3
The Weekly Top 3
The Weekly Top 3 (2.10.2025)
Welcome to The Weekly Top 3 - our look at the top 3 things on our mind here at Alaskans for Sustainable Budgets - for the week of February 10, 2025.
This week, our top 3 issues are these: 1) we explain what a difference a week made as we sort through recent developments on the Cook Inlet import projects (2:04), 2) we discuss our thoughts on President Trump's comments on Japan and #AKLNG (19:02), and 3) we discuss the additional disclosure that we think all presentations and op-eds pushing for more state appropriations should contain (36:56).
The Weekly Top 3 is a regular weekly segment on The Michael Dukes Show. The Show broadcasts on Facebook and YouTubeLive as well as via streaming audio from the Show’s website weekdays from 6–8am. We join Michael weekly in the first hour of Tuesday’s show, from 6:25–7am, for a discussion between the two of us about our three issues.
Hi, this is Brad Keithley, managing Director of Alaskans for Sustainable Budgets. Welcome to the weekly top three, the top three things on our mind here at Alaskans for Sustainable Budgets for the week of February 10th 2025. The weekly top three is a regular segment on the Michael Duke Show. The show broadcasts on both Facebook Live and YouTube Live as well as via streaming audio from the show's website. Weekdays from 6 to 8 am.
Speaker 1:I join Michael weekly in the first hour of Tuesday's show from 6.10 to 7 am for a discussion between the two of us about our three issues. We post the podcast of our discussion following the show on the Alaskans for Sustainable Budgets Facebook, youtube, soundcloud, spotify and Substack pages. Also on the Alaskans for Sustainable Budgets website, as well as the project's page on national blog site mediumcom, you can find past episodes of the weekly top three also at the same locations. Keep in mind that, in addition to these podcasts during the week, you can also follow and participate in the discussion with us of these and other issues affecting Alaska's fiscal and economic condition by following us on the Alaskans for Sustainable Budgets Facebook page and through our posts on Twitter.
Speaker 1:This week, our top three issues are these First, we explain what a difference a week makes as we sort through recent developments on the Cook Inlet import projects. Second, our thoughts on President Trump's comments on Japan and AKLNG. And third, we discuss the additional disclosure that we think all presentations and op-eds pushing for more state appropriations should contain. And now let's join Michael.
Speaker 2:This week's topic. Let's get started Sorting out the Cook Inlet. There's a lot here, Brad, Unpack it for us here. What do we got?
Speaker 1:So the alternate title to this segment is what a difference a week makes. Last week we were complaining about the RCA not stepped up to look into what was going on in the Cook Inlet. We were complaining, we were saying where is Chugach and MEA? In all this, nstar was on track to sort of an unabated track to go forward on its talk about Quixotic, on its Quixotic effort to build a new LNG plant on property that neither it nor the person who it proposes to build the plant own, without any existing permits, but nevertheless was on track to do that. That's all changed in a week and the reason I'm wearing the ray of sunshine is I think it's changed in a good way.
Speaker 1:Two big things, one pretty public, the other sort of running under the radar. The one that's pretty public is the announcement during the week by Chugach and Harvest Alaska, which is a subsidiary of Hillcorp, to buy, for Hillcorp to buy the old Kenai LNG plant. The existing plant. The plant that's got the existing permits to import gas right now has got the facilities mostly in place to do that, has got existing LNG tanks in place to store the imported gas, a lot of the imported gas. The announcement by Chugach and Hillcorp, that Hillcorp's going to buy that facility from Marathon and Hillcorp then is going to sell gas gas that it regasifies out of that plant to Marathon, who, interestingly enough, uses a lot of gas or would like to use a lot of gas to power its refinery and to sell it to Chugach and to solve Chugach's problem in that fashion.
Speaker 1:Nstar talks about 2029, 2030 as a solution to its problem its plant on land neither it nor the party with whom it has entered into a contract own. While NSTAR talks about that timeframe, chugach and Hillcorp are talking about, or Harvest, are talking about a timeframe much shorter than that, a timeframe that meets Chugach's uh, and presumably would meet mea's needs and homer's needs like next year you're talking about like 2026 by delivering some of the first gas, with full production coming up in 28, right I mean it's?
Speaker 2:it's a fast timeline compared to everything else we've heard so far it's an existing plant.
Speaker 1:What you have to do is you have to re-kid it some, because right now it's still kitted to export gas, to take gas in, liquefy it and then export it on ships and take it out. So you've got to change that machinery out to re-gasify the liquefied gas that's going to come in, and you've got to get a permit gasify the liquefied gas that's going to come in, and you've got to get a permit. Right now it's permitted, uh, only to receive gas for sale to marathon, for marathons needs. It's not permitted for sale to others, uh. But but those things, I don't think most analysts think those, those things are big deal. Certainly not the, certainly not the equipment side of it's not a big deal, and I don't think most analysts think the the permit side is a big deal. So that's, that's one thing, that's a, that's a. That's a huge thing that that we'll be talking about now in coming weeks.
Speaker 1:The second big thing, uh is that the rca stepped in uh and and put a pause to nstar's's proposed transaction with Glenfarn. Nstar had filed for approval, seeking approval to pass the costs of its deal with Glenfarn up to a certain point sort of the beginning stages of it up to a certain point through to its ratepayers without further RCA review. It was essentially an effort to get an approval of its project in the form of a rate increase without asking the RCA to look at anything else. The RCA stopped that, suspended NSTAR's filing and set it for hearing to look into it. Now part of what NSTAR has proposed to do is to.
Speaker 1:You know we've talked about the backstop on the AKLNG project a lot, the backstop that ADA has proposed to give to AGDC, so AGDC can give a backstop to Glenfarn.
Speaker 1:Actually NSTAR has a backstop in its deal with Glenn Farn. It agrees, has agreed to fund if NSTAR has or Glenn Farn has to do the same sort of FID analysis they have to do on the big line and NSTAR has agreed to backstop Glenn Farn's costs on that. If Glenn Farn does the FID and decides not to go to FID or the parties decide not to go to FID, that is, pursue the project, construct the project. If Glenn Farn decides not to go to FID, then NSTAR has agreed to backstop Glenn Farn, to repay Glenn Farn for all the costs it's incurred, up to $50 million, the same thing as on the AGDC side and Instar proposed to the RCA to be able to pass those costs. If it paid those to Glenfarn, pass those costs through to its ratepayers through the gas cost adjustment mechanism and that would be a huge sum to try to get through the gca 50 50 million dollars to the rate payers, just without any further review.
Speaker 2:Oh, and the rca said what the rca said stop.
Speaker 1:Uh said we're going to have a hearing on this stuff, and and I and it came right before the announcement of of of the the chugach and uh harvest deal, right before the announcement of the Chugach and Harvest deal, right before it, like the day before it, that the RCA said stop. And I don't think the RCA knew about the Harvest-Chugach deal, but the two line up very well. So now what the RCA can do is take that proceeding and turn it into an analysis of what the hell are we doing here in the Cook-Ellen. Do we need two facilities? Do we need to keep pursuing this quixotic dream that NSTAR and Glenfarn have to build a project on land neither of them own To? You know, go down the road with this project. Do we need that? Or can we, you know, collect all of the demand in the Cook Inlet and come through the existing Kenai plant?
Speaker 1:There is an issue with the existing Kenai plant and Senator Giesel is actually, you know, sort of vacillating between good and bad on this issue. Senator Giesel actually identified, you know, sort of vacillating between good and bad on this issue. Senator Giesel actually identified it quickly, although she identified it in a very negative way that I don't think it deserves. But the problem is is Hillcorp has market power what lawyers and what antitrust economists would call market power in the Cook Inlet and it's not hesitated to use that market power. I think what stung Giesel was last year when Giesel proposed to close the Hillcorp loophole, the Hillcorp corporate tax loophole, and Hillcorp came back and said oh yeah, you want to do that, fine, we'll just stop investing in the Cook Inlet. Basically, basically, you know, threatening and blackmailing the legislature over the uh, over the proposal that Hillcorp pay the same taxes as everybody else. Um, and and Giesel, I think stung by that um as background, giesel said you know there's a problem with this, with this Hillcorp proposal, which is, you know, hillcorp's market power.
Speaker 1:We've, they have market power now on the on the produced gas side. This would give them market power. They have market power now on the produced gas side. This would give them market power. She's concerned. This would give them market power on the imported gas side and South Central would just be totally at Hillcorp's mercy.
Speaker 1:There's a way of dealing with that and that is to slightly amend existing utility law in the state to clarify that an LNG import facility that resales gas to utility is in fact a utility itself. Right and turn and turn that energy LNG facility into uh, into a utility to the extent of selling gas to uh, uh to utilities, and I and I and that would, that would, that would subject Hill Corp that plant to RCA jurisdiction, rate jurisdiction and and and terms and conditions of service jurisdiction. I think that'd take care of the problem. But but you know it's, it's an issue that needs to be, it's an issue that needs to be thought through at the same time as we're thinking every, every through everything else. Cause you don't want to, you don't want to be, you don't want to have the solution to the Hillcorp market power problem be to give Hillcorp another set of market power.
Speaker 2:You know it's interesting because this whole thing also is built around this idea of time compression as a weapon. Has NSTAR been delaying this whole thing long enough to then to go to submit to the RCA? Well, we need to be able to do this without further review, because now we're on a time frame, even though they've been the one that's delaying.
Speaker 2:There was a post on Facebook last night by somebody who's done a lot of work with HEA, talking about HEA, because HEA, homer Electric Association, is the first utility whose contract is going to run out next month, and they're talking about having to get more gas from NSTAR at triple the the cost triple the cost of what they're getting right now to generate electricity. Um, and if that doesn't make the pucker factor go up for everybody who's on an hea account, including me, um then yeah, you should be looking at this. But I think that's part of the thing, right, they seems to. Maybe the delay makes sense now. They've been delaying this whole time, brad, trying to get this thing done so that they could then create. It's a created crisis at that point, right, but the RCA seems to have adequate service at a reasonable cost.
Speaker 1:That's part of their statutory obligation.
Speaker 1:In exchange for the monopoly they're given over their service areas, they're supposed to have adequate service at a reasonable cost.
Speaker 1:And NSTAR, by this delay, has not only maybe tried to put the RCA in a crammed down position with respect to its proposal, but put the RCA in a crammed down position with respect to its proposal, but put the RCA in a crammed down position with respect to these costs.
Speaker 1:I mean, if you have a project that doesn't go, a failed project you're not a utility is not automatically entitled to recover those costs. It's a risk that utilities take and, as the RCA pointed out in its suspension order, it gave NSTAR a healthy rate of return on equity in order to compensate at some for the risk of supply, the risk of its supply obligation. What NSTAR is really trying to do with this filing is say, look, we're no risk, you know, if the project goes great, we can pass through the costs. The project doesn't go and we incur costs because we have this backstop agreement with Glenfarn. If the project doesn't go, we get to pass those costs through the GCA. And putting the RCA in this time crunch, frankly, I think they're trying to leverage. They were trying to leverage you know the time crunch as a way of getting their costs recovered either way, when they shouldn't be entitled to that.
Speaker 1:So the RCA has put a stop to it. Yay for the RCA. Look, we've criticized the RCA a lot. This is a good job, rca Right. And yay for the Kenai LNG plant, for somebody stepping up. Still got an issue to go. Still got the market power issue to go. But somebody stepping up and saying we're going to use this existing facility.
Speaker 2:Yeah, Brad, I mean I looked at this and all I could think of was so that was the end game. I mean, literally the light bulb moment went off for me when I looked at this and saw what they were trying to do with this rate increase. And I looked at this and saw what they were trying to do with this rate increase and I was like they've been delaying this whole thing so that they could then backstop it, put time compression in there and say we don't have time to do this because now we're out of time and we've got. You just got to give us the, you just got to write the blank check and we'll do it. And, thank God, the RCA said whoa, wait a second.
Speaker 1:We're in charge here and Chugach. I think that's one of the reasons why Chugach kind of broke faith with them here a while ago and said, no, we're going off in another direction, because I think they could see the way things were going. I mean this mightAR it met NSTAR's needs because NSTAR is the last, the last to run out of the Hillcorp contracts. They're the last to run out of the Coquitlam contracts. But it didn't meet Chugach's needs. I mean, giesel said something that that just that bugged. Well, everything Giesel says bugs me in one way or another.
Speaker 1:But Giesel said something that just bugs me. She was criticizing Chugach as part of her attack on on, you know, the the hillcourt market power thing. She was criticizing chugach for having broken off from nstar, having broken off from the unified effort to find a solution to the cookie. That's not what happened.
Speaker 1:What happened is nstar broke off from chugach, nstar was coming up with a solution and and I think part of the motivation here, michael, is nstar was trying to limit its exposure, right, and you can see that in the filing. Nstar is saying look, if they build it, we get to recover the cost, if they don't build it, we get to recover the cost, we don't have to incur any costs. So, as part of NSTAR looking out for itself you know one perspective on this is it left Chugach high and dry and Chugach looking out for itself? You know one perspective on this is it left chugach high and dry and chugach, looking out for itself, said, hey, we need to find another solution. And what about this existing lg plant over there, right, right, um, and so you know it's not.
Speaker 2:It is not chugach breaking off from nstar, nstar breaking off from chugach and going in a way that helps nstar but not chugach and everybody else too, right, I mean because this only served them. This didn't serve any of the other utilities GVEA, mea, hea it didn't help any of the other. This was strictly what was best for NSTAR at that point. And they may say, well, hey look, we ended up not having to pay. The rate payers are going to have to pay. So they weren't really even looking out for their own rate payers at that point.
Speaker 1:The whole thing is just astonishing. I got one comment as I was asking around about the Hillcorp deal or the Harvest deal that I found fascinating. You know, why is this Hillcorp buying this as opposed to Instar? And the response was well, only certain people came to the data room, uh to, to look at buying, at buying the plant. The implication was and I don't know this to be absolutely true, but the implication was instar didn't even go look at the existing plant. They were off in their own off in their own world. Again, this, this, this entire, you know mindset of instar to not have any risk, to avoid any risk, because if they would have bought the plant and something would have gone wrong, then they're at the cost of the plant. On the way they're doing this with Glenfarn, they're trying to be riskless, they're trying to just avoid any exposure themselves.
Speaker 2:Right, it's astonishing. Two sidebar comments. First of all, frank has this every week and I know it's not really your bailiwick, but do you think Brad will ever address legislative funding for commercial fish? I know it's only tens of millions of dollars. Small fish I guess that's not really your bailiwick, but have you looked at anything with the fishing or commercial fishing in the state? Is that anything you're working on?
Speaker 1:state. Is that anything you're working on? It's not, Michael. I look at it from time to time in the context of the budget and whether it can be a contributor to the budget, but the tax rates you'd have to impose on commercial fish are huge for them to even be a material contributor to the budget.
Speaker 2:So it's not something.
Speaker 1:I've spent a lot of time on.
Speaker 2:Anthony says. I feel bad for Brad. Sometimes being part of Alaskans for Sustainable Budget has to feel like going to being in the Alaskans for the Domestication of Bigfoots group Theoretically possible but realistically never going to happen. Chin up, brad, and that's what I feel. Sometimes it's like we're chasing the inevitable who's he? What's it that nobody believes in Brad Keithley on to number two of the weekly top three and we're working our way through this stuff. Japan and LNG this was the big surprise. On Friday. I was actually sitting at my desk monitoring my own radio station, listening to this when the president had this press conference and I was like what? Alaska, lng as a? What national security Japan? And I thought, well, we talked about this, we predicted it. Is it really going to come true? Brad, your thoughts on Japan and Alaska, lng and the federal government what are we looking at here?
Speaker 1:So here's what's happening with the LNG project and it's interesting to see how it's twisting Dan Sullivan's doing this project. And it's interesting to see how it's twisting Dan Sullivan's doing this and Trump certainly did it on Friday. They're twisting the project from a commercial project, a project that is designed to make a lot of money for whoever builds it. They're twisting because that hasn't worked out much. I mean, nobody can run numbers, you can't even do fantasy numbers that make that true. They're twisting it into a national security issue and twisting it into isn't this a great solution to keep Japan tied to Alaska, to the United States? Isn't this a great solution to keep Korea tied? And they're saying things that are sort of funny. They're saying, oh, you know, we're only an ocean away, or you don't have to go through the Panama Canal, there's no security risks, and you know, lng is a great way to link into their security, to provide security to them. At the same time as some of these same people are saying, oh, we wouldn't want Alaska to be dependent on LNG, we wouldn't want to bring LNG up to the, you know, because Chinese submarines might, you know, take down all of the LNG tankers. But now you know LNG tankers in Japan and Korea are secure, but they're twisting. They're twisting the rationalization and the project. Then let's go down that road. And if Japan and Korea think that's a rationalization for the project, then let's go down the road.
Speaker 1:But here's the deal. Alaska shouldn't be paying for it. It's not commercial to Alaska. We don't make money. In fact we lose money. By the time you look at all the subsidies that the AKL and AGDC are assuming that the state would throw in to get the project even down to the cost that they claim would be competitive. Alaska is losing money on this project, clearly losing money on this project, money on this project. So it's not commercial. The new mantra is not a commercial mantra. It's not that you're going to make money out of this project. So it's a thing to do Now.
Speaker 1:It's national security and if it's national security, then the nation ought to pay for it. The federal government ought to pay for it. I mean, nobody would expect Alaska to pay for Coast Guard ships, ice-breaking Coast Guard ships, although they're most important to Alaska. Nobody would expect the state to pay for that national security device. Nobody expects Alaska to pay for the jets up at Eielson that defend us. Nobody expects us to pay for the troops that are up at Wainwright, that are prepared to defend, you know, the Arctic, the Arctic portion of the U? S? Which, right, not a money-making operation which? Which is Alaska? Right, they're all national security issues. And so if this is, if, if this now is a national security issue, great, but the feds ought to pay for it.
Speaker 1:And there's precedent for this. In world war two, ii, we had a problem, the nation perceived a problem getting oil, which was important to the war, that was taking oil from the Southwest, from Texas and Louisiana, which is where the oil was to the East Coast refineries, primarily in Philadelphia and the New York area. And the concern was that we were putting the nation at risk. And so, as a national security event, the country built, the country federal government built two pipelines, one's called the Big Inch and the other's. The country federal government built two pipelines, one's called the big inch and the other is called the little inch, and they're still in operation today. One's in operation as a, as a gas pipeline, the other is an operation as a, as a products pipeline I think an oil products pipeline now, but they're still in operation today.
Speaker 1:And the country built them, created a corporation that was that had a lot of parts to it, but some of the parts were the oil companies who were capable of building this thing. The company the country formed a corporation built the pipelines. It was built as a national asset, as a defense asset, as a national strategic asset. Now, after the war was over and nobody was concerned about German U-boats anymore, they were sold into the private sector as part of the surplus, the war surplus sales. They were sold into the private sector and became part of the private sector. But at the time they were built they were perceived as national strategic assets and built as a as as national, as national pipeline.
Speaker 1:So if that's, if that's how we perceive, is that, if that's how we're now perceiving the, the AKLNG project, if that's the push that Dan Sullivan's putting behind it, then you know my response is put your money where your mouth is. If it's a national strategic asset, put it through the defense budget or put it through some other budget, uh, to go ahead and and build the pipeline, um, and and go forward with it. Uh, go forward with it that way. Don't just like you wouldn't ask Alaska to pay for the planes up at Eielson or the troops up at Wainwright, uh, or the coast guard, or the coast guard ships the Kodiak. Don't ask Alaska to pay for it. Don't force this national, the cost of this national strategic asset on one state. Spread it broadly, uh, through the, through the federal budget, and I and I think that's you know, I think that's the, I think that's the way if we're going to go down this road. I think that's the way to go forward.
Speaker 1:No one, you can't make a commercial case for this pipeline. You just can't. I mean, agdc has tried and tried repeatedly to make a commercial case for it. You just can't in the current environment. Right, if you look, if you look at you know environment. If you look at all of the LNG that's coming on the, all the tidewater LNG that's coming on the market throughout the nation. If you look at the forward futures prices for LNG, the AKLNG project just can't compete commercially.
Speaker 2:If you look at their own study, which has some of the rosiest assumptions the Wood-McKenzie report, which even the rosiest assumptions, is an 80% subsidy and it still delivers gas at 30% above market value. I mean that's an 80% subsidy on what they're still using numbers from the Walker administration of $44 billion you know it's probably 60 or 70 billion now by the time, with all the inflation and everything. But the rosiest assumptions at44 billion with 80% subsidy is a 30% over market value. You just you can't make it happen and this is what you and I have been going on about for months. Finally, I noticed this Hillcorp article that was talking about Hillcorp. They finally quote Kathy Tilton. At the end it says well, of course Alaskans would prefer to drill their own gas, but the only solution is him. I mean we've been talking about this for months that this is the only solution. Why is it that we're the only ones that? I mean they finally came around to our point of view because of time, essentially at this point.
Speaker 1:Well, michael, it's because, it's because we run spreadsheets, it's because we actually take the numbers and calculate the market effects. I mean a lot, a lot of this. A lot of the legislature certainly runs, as you have correctly pointed out time and time again, on emotion, the emotion of oh, it's gotta be Alaska gas, it's gotta be, you know right, and and. But when you put it in spreadsheets as I do often, when you put it in spreadsheets, it doesn't, it just doesn't calculate. And the same thing's now true of the, of the, of the big line. It just, it just doesn't calculate. If it did, it would have been built already. If it did, we would have more people than just Glen Farn, a small cap, inexperienced operator trying to trying to hit it big. We'd have more than Glen Farn, uh, trying to pursue this project. What do you think? But it just doesn't.
Speaker 2:What do you think the possibility is that this actually becomes a national security, a national strategic asset issue where they actually will break off some money. I mean, do you, do you think it's going to happen? Or does this new Chugach Hill Corp harvest thing, does that submarine it? I mean what? What do you think Are they? Are they hell bent for leather to get it done?
Speaker 1:or you know what's your, what's your take on this? Now, chugach Hill Corp, uh, uh, even the NSTAR deal does not affect the big line, does not affect the international nature of the, of the big line, I mean the. The in-state demand is minuscule compared to, compared to the size of that line and compared to what they need to make it. To make it, uh, to make it work, Um, does, does. Does the nationalization of it? Um, uh, does that work?
Speaker 1:You know, with Trump, you never know. I mean tomorrow Trump may wake up and say, yes, it's important that we have this tie to Japan, it's important that we have this tie to Korea. I mean, who knows what Kim Jong, whichever one it is in North Korea, is going to do tomorrow? And you know, and perturb Trump, and his response would be X, I mean. But that's the case. They're making for it, that's the case Dan Sullivan's been making for it, that's the case that Trump himself made for it. On Friday, you know, john Sims tried to do that with the whole Cook Inlet incentives deal. At one point he said well, you know, we got a military base, we got J-Bear, we don't want it dependent on imported gas. And he tried to turn that into a national issue and the response was okay. If it's a national issue, if it's a national security issue, if it's important that J-Bear have Alaska gas, then J-Bear can pay for it. And you know, that sort of died out fairly quickly, right.
Speaker 2:So you know maybe.
Speaker 1:Maybe if we say in the federal government can pay for the big line, maybe that'll die out fairly quickly.
Speaker 2:Yeah, and still no talk of maybe a Jones acts exemption, a little bit of money to dredge out up North to do tankers, or I mean there you know there could be other solutions. But here we are. Here we sit, wondering where it's going to happen, but at least we're further ahead this week than we were last week. Like you said earlier. What a difference a week makes one minute.
Speaker 1:I mean Trump, trump's opened, and you know Dan Sullivan had been trying to kick that door open about. You know, the national security issues, this whole. This all is justified by national security, but Trump just blew it open, as as Trump does when when he gets into an area. He just blew it open on Friday. And so, okay, let me think about this as a national security issue. And the first thing that came to my mind seriously shows you how bizarre, how twisted I am. First thing that came to my mind as I was reading the articles okay, big inch and little inch, we've done this before, Right, we? You know that's how part of the pipeline, the, the, the, the Southwest East Coast pipeline industry got started. We've done this before, so let's let's do it again. I mean, if that's what we're talking about, it's a strategic issue, then the federal government ought to step in and do it.
Speaker 2:Well, I won't hold my breath, but I will be watching with interest at this point to see where things are going. You know, I don't think a lot of people really understand and I've come to understand more about Trump here in the last three or four weeks than I ever have before and realizing that this guy is transactional. Dan Bongino has been talking about him being a transactional president and in a lot of ways that's true. I didn't think about him as the businessman who comes in as a negotiator, because he's one of the best negotiators out there. You can love him or hate him, but what he does is he walks into a room and he stakes out a position way over here. He only really wants to get about halfway there, but he stakes out a position way over here and so everybody loses their mind and they're like oh, it's a shock and awe value, right, that's what he does with each and every one of these things.
Speaker 2:And you saw again, not a fan of tariffs here, but he's utilized tariffs as a bludgeon. Look what he did with Mexico. Look what he did with Canada. Oh, you don't like it? Well, we'll just put tariffs on everything. And they immediately. You know, oh, you don't like it. Well, we'll just put tariffs on everything and they immediately. You know well, what would you like us to do? We'll stop immediately. You will do, you know, and so that's. It's a genius maneuver, it really is, he is. He walks into a room and says this is what I want, and he's really happy to get half that if that from time to time. But that's where that's what he's doing here. I just hope that maybe you know an Alaska LNG line as a national security issue. Maybe he's serious about it. I don't know, but we'll be watching closely, I guess.
Speaker 1:Well, you know, I, I think, I think you know it may have merit as a national security issue. It may have merit, but as a national security issue it shouldn't be Alaska's burden. Just like the coast guard cutters, just like you know, the the the coast guard, the presence of the coast guard, just like the presence of, of, of the planes up at Eielson and the troops at Jay or at that at at Wainwright. It shouldn't be, it shouldn't be an Alaska burden. It should be a national burden. If that's the justification for it, it should be a national burden. And rather than going to AGDC, rather than going and making all these presentations to the legislature as if it's a commercial project it's just a waste of time they ought to be going to Dan Sullivan. Dan Sullivan ought to be setting up hearings before the Armed Services Committee or before other committees in DC to have AGDC make the presentation that it's a national security asset.
Speaker 2:That does raise other issues, though. Right, because now you have an equity and fairness issue with other gas patches and things like that around the country who are saying, well wait, where's the federal government to build out our infrastructure at the same time, absolutely right, and we've already seen a lot of that, a lot of that pushback.
Speaker 1:But Trump says and there's some merit for this Trump says the Alaska project is the only American West Coast project. There isn't a project, will never be a project, in Washington, oregon or California, because the way those states view this sort of infrastructure or that sort of continuation of the gas economy, the only place it's ever going to happen is in Alaska. And Trump's made a big deal I mean link this back in Trump's made a big deal about the Panama Canal and how strategic the Panama Canal is and how important it is that America. Well, this is the. You know, the only way you get there from the Gulf Coast economically, from the Gulf Coast LNG plants, is through the Panama Canal. So Alaska is different if when you view it through a national strategic asset lens, alaska is in fact different because it's on the West Coast and it's got those advantages in terms of in terms of time and linkage to Japan and Korea.
Speaker 1:So you blow back and you say you know, look, I mean there was the same complaint during world war II. The shipping industry and some smaller uh ways of getting oil from the Southwest to the East coast blew back in the in world war II and said wait, wait, you shouldn't be building this net, these pipelines. In World War II and said wait, wait, you shouldn't be building these pipelines. You know we got ways to do this. You're taking away our customers. And the nation said, nope, it's in the national interest to build these pipelines. So there is, you know, a uniqueness to Alaska. It's just not commercial, though.
Speaker 1:I mean we can't make money off of this. So, given all the other demands on our money, we should not be spending money on it.
Speaker 2:Well, and the big question of course is and Frank asked it is who pays? Well, that would be you and me. Baby, the whole country will pay, although somebody else pointed out that there's still $600 billion. Who pointed it out, Chris? There's $600 billion, who's? Who pointed out, chris, there's 600 billion dollars left in the infrastructure. There you go, take 10 of that, fix it, get it done.
Speaker 2:I mean the greenies would probably roll over, but I mean, well, or just let elon musk and musk and doge continue to go through usa and everything else and look through. They'll find that 70 billion dollars to do the pipeline here pretty quick if they need. But I mean again, if I was going to complain about anything that the federal government was going to do, building infrastructure would be the last thing that I would complain about. Maybe I complain about the costs or the overrun or the inefficiency, but at that point if they were going to build on something that was at least infrastructure bridges, dams, pipelines uh, I mean that would probably be the last thing that I would complain about at that point.
Speaker 1:Final thought brad 30 seconds and trump's talking about sovereign wealth fund. This is this would be a hell of a lot better asset to have in the us sovereign wealth fund than tiktok. Um, it'd be. It'd be much more useful to the nation all right, brad keith lee.
Speaker 2:and the weekly top three continues on to number three. We're going to finish up here. The story of the missing paragraph. This sounds like an encyclopedia Brown mystery, but here we go Nancy Drew and the Hardy Boys. What is the missing paragraph? What are we talking about here, brad?
Speaker 1:Doesn't really go down that track, but it's a good track to go down.
Speaker 2:I just loved the title, so I'm running with it. Go ahead.
Speaker 1:So part of my career as a lawyer I had to deal with SEC issues, the Securities and Exchange Commission issues. It was related to oil and gas disclosures and related to what oil and gas companies had to say in their SEC disclosures. But part of my career was focused on SEC and what SEC rules say and all the SEC really does is require you to disclose information. All the SEC Act and the SEC regulatory agency really do is require you to disclose information and then they leave it to investors to evaluate that information. If the disclosure is, this project may never happen. You may never get your money back. The SEC is satisfied. It's up to investors to decide whether they want to go down that road and it's really an information disclosure obligation that the SEC has In Alaska. What I'm beginning to think that we need when I see headlines this was generated this week by headlines that an opinion piece in the ADN that says why Alaska must invest in public education now, and then another one that says Alaska contractors warn of alarming outlook for 2025 road construction season and there's quotes in there about that. They need $300 million or something out of the legislature to get them through this coming construction season or in the Alaska beacon University of Alaska president, highlights impact on workforce research and economy and address, but Pat Pitney says the university is facing headwinds from federal executive orders and potential budget cuts. You know, it's just headline after headline after headline of we need more money and we need it from the legislature. And here's the missing paragraph. I mean, if I'm thinking about this in SEC terms and I'm sitting there as a legislator, I would say when you come to make a presentation to me or when you write an op-ed that you're hoping would influence me, you need to include a paragraph. And the paragraph needs to say two things. It needs to say how you propose to pay for it. Three things how you propose to pay for it, whatever you're asking who pays for it and whether you're willing to be one of those people paying for it. The thing that really triggered this was this opinion piece by a bunch of people, including Jake Metcalf, who's former head of one of the public employees union. That was titled why Alaska Must Invest in Public Education. Now it's this long piece about how important public education is, how the state needs to be funding public education, this additional you know, the additional funding that's absolutely crucial to make sure that our kids are looked after, and you get all the way to the bottom and there's nothing in there about either a how are you going to pay for it? B who pays for it? Under under this proposed, under your how are you going to pay for it? Approach and see whether you're willing to pay your proportionate part uh of of the cost. It's just all of these are.
Speaker 1:We need more spending, but you know, I don't know how to pay for it. We need more spending. I assume it's going to come from PFD cuts and guess what? I don't have to pay since I'm in the top 20%. All of these people who were writing these articles are in the top 20%. I'm in the top 20%. I get to escape if we push it off on PFD cuts.
Speaker 1:I want a paragraph that requires people to explain how they're going to pay for it. I think it would be useful. I think it'd be useful, just like SEC disclosures are useful, in telling investors what's the motivation you know, what's the commercial, what's the commercial outlook for this project, what's the you know the impacts of this project. I think it would be useful to have a required disclosure in legislative presentations and in op-eds, and designed to influence legislators that says how are you going to pay for this project, how are you going to pay for this spending, how are you going to pay for this spending and are you willing to pay your proportionate part of the costs of that spending? And I bet we wouldn't see as many presentations if we had that.
Speaker 1:Required disclosure, just like the SEC. Disclosure rules frankly push a bunch of people, push a bunch of projects out because people don't want to make those disclosures. They know if they make those disclosures, nobody's going to invest in them. So they just end up not making those. Those. Those proposals, just like the SEC rules, protect against, against these fly-by-night operations. That sort of disclosure rule in front of the legislature, I think would protect against a lot of these people coming up and and and asking for money.
Speaker 1:Or if they did, at least you'd have them on the record saying yes, you're going to. You're either a you want somebody else to pay for it, yeah, go away. Or B okay, you're ready to pay your proportionate part of it. Great, let's get you on the record. Let's get you on the record saying that how you're going to pay for it and that you're willing to pay your proportionate part of it. These, these, these, just you know, throw it into the air. I want more money. I want more money for K through 12. I want more money for construction. I want more money for the university. Just throw it into the air stuff, that's just. It's not working for me. It for the university? Just throw it into the air. Stuff. That's just. It's not working for me. It's not, and it shouldn't be working for the legislature. They should have these people stand up and say and yes, this is how I'm going to pay for it and yes, I'm willing to pay my proportionate part of that.
Speaker 2:Well, and of course, the problem is is you've got a public that is woefully educated on how the process works. And so all you see and I was going to do a show on this and I decided not to, but there was I had a half a dozen different Facebook posts from these different local groups, community groups, where people were just we need to fund education more, we need to keep our schools open, we need to do this, and nobody is asking, or if somebody does ask, they get shouted down. How do we pay for it? The state is out of money, the state is broke, there's nothing left. They'd have to take the entire PFD and nobody is, and nobody's mentioning that.
Speaker 2:Because of the illiteracy of the public on how the process works. It's. I'm not criticizing them, I'm just saying they're not taking the time to understand how the process works. They don't understand. We have a declining enrollment. That's the biggest problem is that there's fewer students, fewer butts in the seats, so that's why they're getting paid so much less and the COVID money which they used inappropriately, and now all those chickens are coming home to roost, but nobody understands that, and so the discussion is not even being had. It is we need to fully fund education. We've been fully funding education.
Speaker 1:The discussion's not being had. I mean, we have this conversation occasionally and I think it's a useful one. The discussion's not being had because people aren't being forced to confront who pays for it. They aren't being forced to confront that it's middle and lower income Alaska families that are paying for this stuff. I mean, the top 20% get away with writing op-eds like this and, when asked who's going to pay for it or how it's going to be paid for the PFD cuts, well, you know, charlie, what that means is you're not paying for it. You're pushing the costs off on the very people you're claiming to help. You're pushing the people, you're pushing the costs on middle and lower income Alaska families, and and they're getting away with doing that because they don't have to confront who pays for it. They don't have to confront you know how it, how it's going to be paid. They just assume this money comes off, comes out of of the, comes off the trees.
Speaker 1:I mean, I I have these discussions occasionally on facebook or twitter or in personal discussions about you know. Somebody says, well, we just got to increase k through 12 and I said, okay, well, how are you going to pay for it? Well, I'm willing to give up a piece of my pfd. You know in my responses. You know how much of a piece of your pfd is of your income. It's like 0.00001. But you know how much it is middle income family. You know how much of a piece of your pfd is of your income. It's like point zero, zero, zero, zero, one percent but you know how much it is middle income family.
Speaker 1:You know how much it is to a low income family, yeah, and they say, well, we'll address that other ways, we'll deal with that. We'll deal with that, otherwise it's all proportionality right now let's deal with it through an income tax. You want to pay for it then, or you want to do this, then you have to pay a proportionate part of it, and let's do this. Oh no, we can't do that. We can't do it through an income tax.
Speaker 2:Well, it's all about proportionality. At that point, what is the cost to you as proportion of your entire income versus you know what is it to somebody else? But I mean, that's the thing that just blows me away is people are just like, oh, just fund it, just fund it, the well is. She is dry, there is not much left. And what you do if you did try to fund it and drain the PFD down to zero, what happens next? And nobody's asking those questions. Uh, I mean, there are a few legislators that bring it up, but for the most part nobody's asking those questions, and they are the loudest voices out there right now.
Speaker 1:Those, those, those legislators are the ones are, are the ones that are staying quiet, are the ones that are pushing for this combination of the corpus and the earnings reserve so they can start going into the corpus to pay for it.
Speaker 2:Final thoughts.
Speaker 1:Brad Final thoughts is it's a little bit sunnier this week. Cook Inlet's on an upswing, on an upswing. Uh, we've got good news on Cook Inlet in the form of Hillcorp and or in the form of the Kenai LNG plant and in the form of uh, uh, of uh, of Chugach's, uh, step Um, and, and we got, but we still got other issues.
Speaker 2:That's the thing, brad. I mean. I literally was pulling through these groups in the Mat-Su, in Fairbanks, in Homer, down on the peninsula, and everybody's like don't close my schools, just fully fund it. The legislature should just do their job and they should just fully fund. They are fully funding it, they're funding it according to the formula and they're giving money on top of it and have been. But the biggest problem here that nobody's talking about is the declining enrollment 15%. In Fairbanks their enrollment dropped in one year 15%. And they're not talking about that. And they're not talking about the continued projected decline that it's just going to get worse. These school districts have been running deficits for years and the answer is just ask Uncle Sugar for more money. Uncle sugar is broke, there is no more money. But nobody seems to acknowledge that. It's just always oh, just pull it, it's. We're so disconnected from how this whole thing works.
Speaker 1:It's, it's just amazing we are. I've been reminded of that. I've been visiting my mother in Illinois a lot and uh and and I've reconnected with some of the you know some of the people I grew up with and I've been reminded of how local schools are in Illinois because they're funded largely through through local school districts and taxes on local school districts. The state funds a portion of it, makes some contribution to it, but but the primary funder is the local school district and so in Illinois people are very this isn't true in Illinois about everything, but in Illinois people are very focused on being cost-conscious about school districts, making sure school districts are at the lowest cost.
Speaker 1:Rural part of Illinois there's there's pushes to consolidate because they recognize that that the tax base that's there just can't support. You know these, the smaller school districts that that we used to have and so we have. You know people. We have school districts that are much bigger now. It's because it's we had school closures and school districts are much bigger. School districts are much bigger it's because it's locally funded, it's because people have to confront the funding themselves, it's because they have to pay and so they get involved in keeping the cost.
Speaker 2:Yeah, they're invested in it and we here, we're just. I mean again, look at the comments. I was going to just read the comments for an hour, because people obviously don't understand what's going on in the state and our legislators are not doing anybody favors by continuing to lie. Gary Stevens got caught in the whole lie of the 40 students per classroom thing and everything else, and it's just. It doesn't matter to them. They just want to protect what they need to protect and they'll do whatever. But the people don't understand, and that's the problem. If the people truly understood what was happening with this, they would be up in arms about it. They would be up in arms about the way the spending is going, but they're totally disconnected because it comes from a permanent fund and they never see it.
Speaker 1:I think part of the solution, I think part of the solution to K-12, I think part of the solution to education, is increased local funding, increased required minimum funding and however that and the impact because it impacts them. I think Alaska has become too remote in that sense it's somebody else's responsibility. I mean, this was the whole problem with building new school buildings, right, I mean, let's build a new school building? Oh, that's a great idea. The state will fund 90% of it. You know, let's add this, this gizmo and that gizmo to the new school building, cause the state's going to pay, pay 90% of it. We need to. I think part of the solution, frankly, is to localize the funding more, and and the way we would do that in Alaska is increase the required local contribution, and then we'd see all sorts of things. Then we'd see people in Fairbanks going oh, we need to consolidate these schools.
Speaker 2:Yeah, let's find some cost savings, because I think there's only one or two districts in the whole state that are anywhere near the local cap. I know Juneau is but Fairbanks and I think but Fairbanks, and I think both Fairbanks and Mat-Su have got a pretty good sized chunk that they could go to if they really wanted to do it. But then people would be like wait, you mean we have to pay. Yes, that's how it works. You have to pay If you want a chicken in every pot and you want every school to remain open. There's a cost to that.
Speaker 1:So yeah, yeah, and that's sort of what I mean by the missing paragraph. Let's put in the payment what payment you're proposing and let's localize it in terms of you have to pay. Are you willing to step up and pay your proportionate part? And the answers are going to be different than what we're getting now when somebody else has to pay. Are you willing to step up and pay your proportionate part? And the answers are going to be different than what we're getting now when somebody else has to pay yes, I want you to spend more money on this because I don't have to pay for it.
Speaker 2:Everybody else has to pay for it and it's so infuriating to see them buy into the narrative. Well, you flat-funded education. No, they haven't. The BSA the base formula has been fairly flat, but they've been spending hundreds of millions of dollars every year on top of that. You just seem like you forgot about that. No, they intentionally have been misled by legislators, the NEA, the education complex, I mean that's who they've been misled by, and they're just parroting the talking points instead of looking at it and they don't understand. That's the bottom line. I read all these comments and I realize none of these people understand how this process works.
Speaker 1:Yep, and it's because of the remoteness, michael. I mean it's because it's because the dollars are remote from them. They don't have to pay them. And you know, for the top 20% they even when they do pay them, it's a very, very, very small part of their income and so it's just, you know. Sort of like someone criticized me for the second segment about let the federal government fund the pipeline, I mean the criticism is well, you don't have to pay for it. Then I mean you're trying to shove the costs off on somebody else. But that's what we have a lot in this state. We have people saying I need more for education, I need more for construction, I need more for the university. Somebody else pay for it, right?
Speaker 2:No, it's insane. All right, brad, thank you so much, you, ray of sunshine. You Thank you for coming on board and we'll talk to you next week, okay.
Speaker 1:Michael, good to see you. Well, that's a wrap for another week's edition of the Weekly Top Three from Alaskans for Sustainable Budgets. Thank you again for joining us. Remember that you can find past episodes on our YouTube, SoundCloud, Spotify and Substack pages, and keep track of us during the week on Facebook and Twitter. This has been Brad Keithley, Managing Director of Alaskans for Sustainable Budgets. We look forward to you joining us again next week for the next edition of the Weekly Top Three.
