The Weekly Top 3
The Weekly Top 3
The Weekly Top 3 (6.16.2025)
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 June 16, 2025.
This week, our top 3 issues are these: 1) we discuss where we believe oil prices are likely headed and how Alaska could reduce the fiscal roller coaster the state’s current budget approach creates (2:09); 2) we discuss one issue that we believe should be at the heart of the coming education task force and its subsequent recommendations (17:41); and 3) we examine what a recent decision by JERA — Japan’s largest LNG importer — means for Alaska LNG (37:39).
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 June 16th 2025. The weekly top three is a regular segment on the Michael Duke Show for Sustainable Budgets for the week of June 16, 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 projects 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 conditions 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 discuss where oil prices are likely headed and how Alaska could reduce the fiscal rollercoaster our current budgetary approach creates. Second, we discuss one issue that we believe should be at the heart of the coming education task force and its subsequent recommendations. And third, we examine what a recent decision by JIRA Japan's largest LNG importer, japan's largest LNG importer means for Alaska LNG. And now let's join Michael.
Speaker 2:All right. Well, let's tackle this. Oil prices. You know, we know, that next year there's a predicted $1.5 billion budget, and that was based off some higher oils. And then oil started to tank and it looked like it was going to slide down into the 50s. And then, of course, israel and Iran got into the little thing, and so now it's man, I feel like I'm on a roller coaster. This is like an e-ticket ride at Disneyland. What, what is you know where oil price is going? What does it mean for us?
Speaker 1:Now, this is the segment that I'm absolutely going to get wrong, because, you know, predicting oil prices is is a fool's errand. Um, and I'm not really trying to predict the precise price, that would truly be a fool's errand, but I think I think it's useful to talk about some fundamentals, uh that that we see in the oil markets, that that are useful to remind ourselves of when these roller coasters get going. And the fundamentals are the fundamental is prices set by supply and demand. We always have to keep that in mind, that we can have all these things going on in the world. We can have all of the bombs going off or we can have all of the tariffs that are out on in the world. We can have all of the, all of the you know bombs going off or we can have all of the you know tariffs that are out there in the world. That was, that was the story last week, before this started uh, going out that going on out there. But it's fundamental supply and demand and the and the and the fundamental supply side of this is that Saudi has increased production over the last few months. They've increased, they've raised the OPEC ceiling over the last few months. Additional supply has come onto the market and that additional supply has softened price because demand hasn't moved much. That additional supply has softened price in a way that got us down into the 60s.
Speaker 1:What's going on with Israel-Iran is what always goes on when you have something like this in the Middle East it's concern about supply. Supply Is there going to be some activity that disrupts supply in a way that sends us back to 1973, the Saudi oil embargo, or 1979, the Iran revolution? That seriously disrupts supply in a forces price up, and what I think we're seeing is that, for all of the attacks that are going on, for all of the damage that's going on, supply really isn't being impacted. Israel seems to have gone out of its way not to attack Iran's export capabilities. They've attacked energy inside Iran, but it's domestic energy, it's internal energy focused, that Israel has attacked. They've not attacked Iran's export pipelines or Iran's export terminals, and Iran, for all of the bluster and all of the things that it says, has not disrupted shipping in the Arabian Gulf, which, if it did, would have extreme impacts on supply, but it hasn't done that, hasn't done that, and so what I think we're seeing is the market going okay. There's risk here and we're continuing to assess the risk that this will, that this will ramp up in some way, but I think the market is is sort of being capped off by the realization that that there's not, that there's not been supply disruptions to this point.
Speaker 1:There was an FT article Financial Times article that I think was very insightful on this point, and it has a paragraph that I think is useful to read and keep in mind. The interplay of geopolitical uncertainty, oil prices and macroeconomics is rarely straightforward, as some useful research from the European Central Bank published in 2023 indicates. It points out that Brent crude prices leapt by 5% in the immediate aftermath of 9-11 as investors priced in the chance of war in the Middle East disrupting supplies, but they were down 25%. But oil prices were down 25% within 14 days of 9-11, as fears that a slowing global economy would weaken oil demand came to the fore In the two weeks following Russia's invasion of Ukraine in February 2022, rent prices rose by 30%, but they were back at their pre-invasion level eight weeks later. So I think the lesson we take from this, or the lesson that the market takes from this, is when there's an event that is, in a major supply region or in a major demand region. When there is an event that could theoretically put supplier demand at risk, the market's going to react and it's going to jump, and it's going to jump either one way or the other in response to that event, to use a probably inappropriate metaphor. But as the smoke clears and and you begin to see whether there is actual damage to supply or damage to demand, um, the market sort of sort of readjusts and we're we're seeing that. We're seeing that to some degree in the markets.
Speaker 1:I pulled up the markets this morning and the December uh 25 or the, the midpoint uh 2020, the midpoint fiscal year 26,. Which is the way we think about it in Alaska. The midpoint fiscal year 26 oil price right now, as of this moment, futures price is $71. The midpoint FY27, the year after that is $68. So I think you see the market sort of still hiked up as a result of these concerns about whether there's going to be a disruption to supply, but not overly spiked, not convinced there's going to be a long-term disruption to supply. Spiked, not convinced there's going to be a long-term disruption to supply. And I think you've also seen it sort of coming off the highs that spiked to shortly after the beginning of the Iraq-Israeli or the Israeli attack on Iraq. So we're in for a continued roller coaster.
Speaker 1:Yesterday, the big news was that there were ships on fire in the Arabian Gulf and all of a sudden, you know, oh my God, there's been an attack.
Speaker 1:We're going to start seeing these attacks on shipping in the Gulf and, as a consequence, there's going to be disruption of supply.
Speaker 1:Well, as the day wore on, it turned out that what had happened is two ships had collided. There wasn't an attack Right, and while the collision may have been a result of navigational disruption due to the war, it didn't look like it was persisting. That navigational disruption was going to persist in a way that was going to put shipping generally at risk. So you're going to see these spikes during a day, or maybe even during a week, but long-term it's supply and demand and long-term, opec has increased supply, which is what led to the softening of price into the 60s and some people talking about going into the 50s. Opec has increased supply. They haven't backed off that as a result of this, and so I think you're going to see if there's no additional activity as a result of the war that results in damage to supply. I think you're going to see prices continue to soften back to the level, toward the levels that we were at before the war started, as time goes on, what does this mean for Alaska, I mean?
Speaker 2:and when you say, see the prices soften again? Trump's vision and goal was oil in the mid to low 50s and of course we weren't there yet. I think we, before the war, spiked. It was down to what 64 or something like that, so we weren't quite there yet. But what does it mean for Alaska?
Speaker 1:I think it means that unfortunately that the spring, unfortunately from a revenue standpoint, unfortunately from a budgetary standpoint I'm always reminded by friends that it means different things on the gasoline side but unfortunately from the budgetary side, I think we're going to see prices come back down into the 60s unless there's some serious supply disruption, long-term supply disruption that starts occurring as a result of the war. I think we're going to see prices start to come back down where they were before, which sort of reflected the supply demand, the pre-war supply demand balance. And if there's no, if the war is not resulting in a significant supply disruption, I think we're going to see it come back down into that range that it was, which is in the sixties, and the market is going to sit there waiting for OPEC to see if OPEC continues to raise the levels. What is going on with OPEC is, during COVID, opec brought its caps down significantly, restricted supply significantly in an effort to, as COVID, destroyed demand, in an effort to balance supply demand at a price point that was in the 70s, and so OPEC brought the caps down.
Speaker 1:What we've been seeing over the last few months is OPEC bringing the caps back up, essentially to pre-COVID levels, and they aren't finished doing that yet. They've sort of brought it up part of the way, but they haven't finished doing that. So I think what of brought it up part of the way, but they haven't finished doing that. So I think what we'll see is prices come back down. If there's no long-term supply disruption coming out of the war, I think we'll see prices come back into the 60s, sort of settle back into the 60s, and they'll sort of sit there waiting on what OPEC's going to do next in terms of continuing to lift the caps back to pre-COVID levels. So the short answer is I think we're going to continue to see budget softness in Alaska.
Speaker 2:So no quick fix to our budget woes for next year with that deficit, because we'll probably be back here within a few weeks if this conflict doesn't escalate or attack any of the supply lines or anything else. So, all right, interesting stuff. Brad Keithley, alaskans for Sustainable Budgets. This was actually one of the things that I was wondering about as this attack came out. I was thinking, huh, what does this do to oil prices? That sounds a little cruel, but I'm just like huh, what is this due to oil prices? I mean, that sounds a little cruel, but I'm just like huh, what is this due to oil prices in Alaska?
Speaker 1:That's how Alaskans think, isn't it, Ooh war?
Speaker 2:Yeah, ooh, I was just wondering I mean, you know, worried about World War III Maybe, but yeah, it was really what was going on with our oil prices. I thought that was a great explanation because I've been wondering about this and you know, I know that things are cyclical and I know that after I know that after the Russia attack, that oil prices stabilized, you know, in a fairly short period of time. But I thought that was that's an interesting take on how all that go, how all that is going to lay out again. This is just another one of those things where there was, you know, maybe there was a hopeful sigh of relief in Juneau and then they realized that maybe it's not going to save all that they're going to do. We're going to have to do something about this?
Speaker 1:Yeah, it really it was. It added some a lot of confusion to the governor's veto of, or the line item veto of, education on K through 12 spending, citing the state's fiscal outlook depressed fiscal outlook or lower fiscal outlook and then coming out with the revised revenue forecast that dropped prices down even further than they had been in the spring revenue forecast. And the next day or maybe it was later that same day israel, iran starts um, and prices spike and and, and so you have all those you have a lot of comments out there of of you know keyboard warriors that say, oh my god, you know governor vetoes, but now prices are way up into the 70s and you know we have all this extra revenue over what the spring forecast. How could he have done that? Uh, well, of course he didn't know.
Speaker 2:it's time yeah, like netanyahu called don levy and said by the way, your oil prices are going to spike, so don't veto anything because we're about to strike iran.
Speaker 1:I mean, you know, come on, it's ridiculous but but even if you'd known that, even if you'd done that, you looking at, I mean, you've got to understand supply disruptions and you've got to focus on supply disruptions.
Speaker 1:And I will say that Israel and Iran Israel in its precision of targeting and Iran in its response have sort of gone out of their way not to hit supply issues.
Speaker 1:I mean, israel has hit internal domestic supply sources, energy supply sources for Iran, both on the gas side and the electric side, certainly, and somewhat on the oil side, but Israel's gone out of its way not to attack the export facilities and Iran's still continuing to export and ships are picking it up and taking it out and it just keeps, keeps on going. So as long as that happens, uh as, as you saw after uh 9-11, as you saw after uh uh Ukraine, after you saw after after a lot of these things as long as that happens and the market sort of sorts out, well, maybe, maybe we aren't going to have, you know, supply disruptions here. You'll, you'll see the that happens and the market sort of sorts out well, maybe we aren't going to have supply disruptions here You'll see the market respond in a fairly short period of time. It doesn't take the market long to absorb that information and then to incorporate it into prices.
Speaker 2:Well, again, like I said, I hear something like this and all I remember is that old bumper sticker that said you know God, please grant us another pipeline. We promise not to piss this one away. It's like we're constantly waiting to be saved by some kind of world event that changes everything instead of changing our own behavior.
Speaker 1:That's the key here, yeah, here, yeah. And the other thing, michael, I mean I'm reminded of a discussion we had last week or the week before we put our. We Alaskans put ourselves in this position by predicating our budget on, on, on the the futures market of the moment. Right, um, you know, we, we predicate spending, we predicate revenue and then spending on whatever the futures market is telling us. And, as I, as we've talked about on the show before, what we should be doing is predicating revenues on historic, on an average of historic prices, just like we do on the PFD and just like we do on the POMV draw. We ought to be looking at what we've had in the past.
Speaker 2:Welcome back to the program. The Michael Luke Show continues. It is Tuesday, which means it's Truth Tuesdays, the weekly top three from Brad Keithley, from Alaskans for Sustainable Budgets. We continue on with our discussions. Number two Brad says he's not going to hold his breath on the conclusions from the Education Task Force. I mean gasp. I'm shocked when you look at the makeup of the task force. What are they going to discover? Brad, give us your thoughts here.
Speaker 1:So one of the pieces of the education bill that passed over the governor's veto. I mean we've got a lot of vetoes going on here. We've got a lot of bills going on, but we'll recall that there was an education bill that set the $700 BSA increase that the governor then line item vetoed in the budget. But the fundamental House bill that set that passed then was vetoed by the governor, then passed over veto and enacted over the veto and so that bill still sits out there as the law and one of the provisions of that that we mostly talked about the increase in the BSA in that bill. One of the provisions of that set up a task force, an education places where you know sort of the, in some ways, the fundamental truths of the education system. Does it need more funding? Where does it need more funding? Does it need reform, policy reform when does it need policy reform?
Speaker 1:Now the task force has a credibility issue right off the get-go because of the members. You've got some very pro-education members that are in the majority on the task force and limited minority membership. There's six members. Four come from the majority, two from the majority in the majority, two from the majority in the Senate, two from the majority in the House, as you would expect, the House Education Chairman of both bodies are on the task force and very pro-education members from other committees are on the task force for the majority. It's Mike Kronk, uh, on from the Senate, from the minority, and, uh, jason Ruffridge, on the, on from the from the house. So you can sort of guess where where the conclusions are going to be, and so there's a credibility issue with the, with the task force, right off the beginning. But here's, here's something that I think the task force actually could raise awareness on and include in its conclusions, and, oddly enough, the idea for that came from an opinion piece by a couple of members of the Well, the chairman and a member of each of the Anchorage and Fairbanks school boards, who wrote an opinion piece that appeared in the ADN and the Dunleavy's education veto shows a leadership crisis and Alaska's urgent need for a fiscal plan, and it's the last part of that Alaska's urgent need for a fiscal plan that I think is important.
Speaker 1:Actually, the editorial that they wrote doesn't go on to describe what they really mean by that. It gets mentioned again only in the last paragraph of the op-ed, but it triggered in my mind, something that the Education Task Force can do and that is frame the education issue as a sub-issue of the overall fiscal issue the state is facing. I don't think you're ever going to get resolution on the K-12 issue. I don't think you're ever going to get resolution on any issue that involves any long-term resolution on any issue that involves the budget involves spending, until you have a fiscal plan in place. As long as we're floating along, dependent on what the futures market says about oil, dependent upon what the permanent fund corporation investment policy is with respect to the permanent fund, as long as you're floating along with sort of a very unstable fiscal plan, I think you're always going to have unstable policy and unstable spending on the other side of the ledger. Those that depend upon the revenue side for spending to fund spending are always going to have uncertainty as long as there's uncertainty on the on the revenue side. So I think I think it would be very helpful in I guess I'm really appealing to to Cronk and Ruffridge to make this point during the uh, during the deliberations of the body.
Speaker 1:I think it would be very helpful if the education task force said look, one of the fundamentals that we've got to resolve before you can resolve education is to resolve the state's fiscal situation. One way or another. You've got to lay down a solid base on the fiscal side, on the revenue side, before we really will get resolution to what's going on over on the spending side K through 12 or any other category of spending you want to address. We've got to get a stable base result on the revenue side and I'm not arguing for increasing revenues or lowering revenues or any of that. You've got to get a solid base on the revenue side and I think part of that is you've got to go look at oil taxes. I think oil taxes are below the constitutional requirement of maximum contribution and I think you've got to go look at oil taxes. I think you've got to go look at what the permanent fund corporation is doing in terms of its investment policy. I think we're leaving 500, 700 million, maybe a billion dollars on the table annual revenue in terms of revenue from the, from the investment policies that the, that the permanent fund corporation is pursuing.
Speaker 1:I'm not suggesting that we have the education task force undertake to write a new oil tax code or to redirect the permanent fund corporation in a way that improves its investment policy. That improves its investment policy. But I am saying that I think it would be highly useful for the Education Task Force to say that one of the foundations of getting K-12 or any spending policy right is getting a very stable fiscal revenue side in place, and I think that would be, I think that would be of service coming from this task force. Now, do I think they'll do it? Uh, do I think the task force will? Will make that a highlight? Probably not Right. They'll want to highlight, they'll want, they'll want to highlight other things. But I think, if Cronk and Ruffridge are, are, are there to contribute anything, I think it ought to be that sort of fundamental concept that we've got to get a fiscal plan, a solid fiscal plan, in place before we really can address any of these issues on the spending side that people want to address side that people want to address.
Speaker 2:No, and I think that this has been the problem. Again, this is the foundation of any home or pyramid or structure or whatever needs to be strong. And that's the problem is that our financial foundation is all over the place. We have no long-term plan, or every outlook is only till next year, maybe the year after, if it's forward looking at all. There is no 10 year. There is no 10 year plan, there is no long term, you know, on any of this stuff. And so, yeah, is it surprising that we run around like our hair's on fire every every session, to some new crisis? No, because they can't decide. And again, this all goes back in my mind to you know, we have a serious spending problem. Now, can we cut our way to the solution? Probably not logistically. It would have to be some kind of step-down approach. But you know, the bottom line is, until we acknowledge that, we're not going to fix it. Whether we replace it with new revenues or whether we cut to it, until we even acknowledge it, it's not going to happen.
Speaker 1:Yeah, and certainly we would get pushback from other members of the Education Committee Task Force on that issue. They would say, no, we have a revenue problem. My point here is what Alaska has done through through various steps focusing on the, on the futures market being one of them, the oil futures market being one of them is we have a very rollercoaster, a very unsolid, a very unstable fiscal base and and as a consequence of that and as we discussed in the show a few weeks ago, as a consequence of that, when you have these spikes in revenue, you get spikes in spending, you get new programs, you get new capital projects underway, you create new expectations, you create new constituencies that sort of don't go away. When, when we, when we, go down the other side of the roller coaster and revenue sort of melts away, you've still got all of these programs, you still have got all this expectations of capital spending. You've still got all of these, all of these constituencies that are still out there, that got built up during the peak periods, um and um and and you know, and they continue pressing even though revenue is melting away.
Speaker 1:I sort of regardless of and it's hard to say this because I know people come with their own preconceived notions about what the solution is. But sort of, regardless of whether it's a spending problem or a revenue problem, we just need to have a solid base, a solid base of revenue and have a base that doesn't go on this roller coaster when oil futures prices or oil prices do what they do. Structure that takes any excess revenue over the base and puts it into some sort of stabilization fund to have it there to balance things out when current revenues go away because oil prices go down. Until we have that sort of solid base and see what that baseline is and then build spending off that baseline. Until we have that, we're going to continue to have this debate and we're going to continue to have.
Speaker 1:You know, people say, oh, we need more spending, or we need less spending, or we need this or we need that. We need to be more like a normal state in the sense of having a baseline, of a regular, predictable, solid baseline of revenue and start from there and then see what spending fits within that baseline. And I think the K-12 task force, I think any task force that's focused on the spending side, would do the state a service by saying, yes, we need to have that sort of solid base. One of the one of the fundamentals of being able to figure out what to do on the spending side whether we have too much, not enough, whatever, whatever One of the things we need to do on the spending side, to have the spending side under control, is to have an expectation of a solid base on the revenue side.
Speaker 2:Well, we know how much they pay attention to task force, right? I mean the fiscal policy working group task. I mean they did a lot of work, spent a whole summer that they can't get back and yet they pretty much ignored everything that came out of that. So maybe we can just ignore whatever comes out of this group. I don't, I don't know it's. It would be nice to see an actual you know commentary that says, hey, we need to have a fiscal plan and have somebody actually follow up with it. That's been part of. The problem is that you know it's just, it's never been followed up on Afterwards. We've probably gone through a dozen of these different you know working groups or task forces or special committees or whatever, and they just never follow through on it. Why? Because it's easier to do what you've always done and that's you know, until, of course, until, of course, the piggy bank runs dry. And then what do you do? Final thoughts here, brad, on this.
Speaker 1:Well, we do have the Fiscal Policy Working Group. Jesse Keel is on that. Jesse Keel is on this task force. A hope would be that he would bring the learning from the Fiscal Policy Working Group over to the task force and talk about the need for that solid baseline. Whether Jesse's going to do that is probably not in the art of the possible, but I do think Cronk and Ruffridge can. I think that's what they can be, if they can be additive about anything. They can be additive about talking about needing to have a solid fiscal base before we really can have a solid discussion about education policy or anything else.
Speaker 2:Well, you'll be happy to know, brad, that Mike Kronk is in the chat room and saying Brad, that is exactly what I told every single superintendent that came into my office and asked us to help or if they could help. I told them to help us implement a fiscal plan. I mean, I hope it happens. I, you know, again cautiously optimistic that maybe something will come out of this. But again, two members of the minority versus the rest of them and, looking at the rest of the makeup, they're all very much pro spend, spend, spend. I don't know. I don't know how much horsepower they're going to have in that room when it's all said and done.
Speaker 1:Well, senators, start every meeting, end every meeting with that statement and at some point, it will be enough that people can't ignore you about it. I do think that it could be very helpful to continue to remind this task force, or any task force, of the need for a solid, solid, predictable baseline that doesn't get spiked when oil prices go up. There's a way of taking that excess money and putting it into a stabilization fund, as opposed to creating more constituencies by spending it. I think there's a lot of helpfulness that can be used by reminding this task force and others that we need that as a baseline before we really can have useful discussions on spending policy.
Speaker 2:Yeah, I mean, that's the thing I mean. Like I was trying to say earlier, until we acknowledge that there's a problem, we're just going to keep doing. What we're doing and that's what we've been running through for the last 35 years is just, you know, oh, there's no problem. You know, hey, we're $3 billion underwater, no big deal. We'll just take it out of our savings account and it'll be fine next year, and then it wasn't fine the next year and it wasn't fine the next year. And every year it was $3 billion, $4 billion that they draw from CBR until there was no more money, and then then they just again it's. It's a classic game of avoidance of dealing with the issue that you're spending more money than you are taking in. Period, full stop, end of sentence. And they just they don't want to even acknowledge that.
Speaker 1:That's part of the problem and they just, they don't want to even acknowledge that. That's part of the problem. Yeah, and and and and. Not acknowledging, I mean, and both Republicans and Democrats do it. I mean, we had a price spike. We had a price spike uh what? Two or three years ago, uh, when, uh, uh, when the Republicans were in charge of the legislature and we had Republican co-chairs, and they spent it. They spent it on a capital budget, but but they spent it and and it's, and we, so we've created expectations, we've created constituencies, we've created a sense of hey, they got theirs, where's mine? We just, we do all sorts of bad things to ourselves when we, when we run, when we run this roller coaster, when we run our state fiscal policy, on this roller coaster of forward-looking oil prices and spending every cent we have and creating expectations. We're going to continue to be able to spend those cents when we hit the downside.
Speaker 2:Well, it's like I said, one of the things that we need to change is the way we budget. I mean, that was one of the number four in the Charter of Changes is, you know, we need to start looking at an average. Instead of predicting what's going to happen next year, we need to look back and say what have we got in the last five or six years, the last 10 years? What is our average? Ok, then, that's what we're going to budget on, or we should go from there, but we need a governor that has the form to actually do that right. I mean, that's the problem. I mean we're laughing, but that's the problem.
Speaker 1:Oh yeah, dunleavy's just been such a from a fiscal standpoint. Dunleavy's just been such a disappointment. I mean, this year's budget, this year's budget is a classic in terms of in terms of his proposed, but his proposed budget was a classic in terms of showing how bad it can be. You know, the 10 year forecast showed, yeah, we have enough revenue and enough savings to get us through a couple of years. And then it's just one big red line from uh, from there on out, and as governor, I'm just going to throw it out there. That way, I'm not going to, I'm not going to try to propose any solutions to it. That's just. That's just. That's just the way I'm going to. I'm going to ride here and that's. You know, what did we elect the guy to do? We didn't elect the guy to do that. We elected him to actually come up with proposed solutions.
Speaker 2:Yeah, no, it's definitely for us, and, in all honesty, of doing this for 25 years, all I could say is it's been the most frustrating thing, because this has been the one thing that I have been pointing to for 25 years that you can't continue to spend more than you take in and expect it's going to work out. Okay, math doesn't work that way, right? We can't work with negative integers on a math, on a on a budget basis and unfortunately, you know they all just oh, it's fine, why are you so, why are you so down? Why are you so negative? But you know, oh, it'll be great, it'll be fine. And yet here we are, like you said, the big red line. That's why we all wore the red shirts today. The big red line, right?
Speaker 1:well, and then you have things like israel, iraq, right, and people are israel, iran and people say, oh well, see, we're gonna be, we're gonna be bailed out again. Look at those prices, you know spike and uh, and sort of forget that that they come back down and that OPEC is on a drive to take control of the market again at a lower price point. It's just. It is frustrating to be on this roller coaster, which is what we've been on.
Speaker 2:We're continuing now. Brad Keithley, alaskans for Sustainable Budgets, the weekly top three. We're saved, brad. We're saved, we're going to build an AKLNG. You heard him say it. The president said we're going to do it, we're saved. Of course you and I, who've been following this issue you for a lot more than I have, but have been following this issue know that this is again one of those pie crust promises easily made, easily broken right. And yet we continue to hear about all these deals. Now Japan may have gone maybe a little more solid on the record, I don't know. Tell us about this decision from Jera and who Jera is, and give us the rundown here.
Speaker 1:So Jera is the biggest Japanese LNG purchaser. There are a number of Japanese LNG purchasers. Jera is the one that purchases, sort of a consortium that purchases for the electric utilities in Japan and is the biggest purchaser of Japanese LNG or imports of LNG into Japan. A couple of weeks ago, or maybe last week, last week, we talked about, you know, the thing that surprised me the most, or the thing that happened, the thing that was most important about the Governor's Sustainability Conference Energy Sustainability Conference was the thing that didn't happen. And the thing that didn't happen was this big signing party that that I think people had looked toward. Uh, when you had, uh, the members of the Trump administration up here, um, I think there was a hope and expect, and, by some, an expectation, that there was going to be a big signing party where the Japanese, koreans and Taiwanese came in and signed, you know, binding letters of intent, or maybe even not binding letters of intent, but at least letters of intent.
Speaker 1:At the sustainability conference around LNG there had been a lot of discussion about, you know, there was going to be a summit, an LNG summit, in Alaska in the early weeks of June, timed with the Governor's Sustainability Conference. We were going to have members of the administration up here, of the Trump administration up here to represent the administration. We were going to have representatives of Japan and Korea and others up here. We were going to have a big signing party, and I think that what we talked about last week was the biggest news out of the Sustainability Conference was the thing that didn't happen, which is that we didn't have that signing party. Well, I didn't know at the time, but turns out there was going to be a signing party but it didn't involve AKLNG. This past week there was an announcement by Jera and others and a big signing party that the Secretary of Interior and the Japanese purchaser making a big shift, announcing a big shift in supply sources from Australia to the US and in a significant commitment by Jera to US supplies as it, to use its terms, rebalanced its supply from Australian focused to more US focused.
Speaker 1:Big signing party down in Houston, attended by a number of people, with Jera signing four agreements, four LNG supply agreements with four suppliers, all of which are located in the US Gulf Coast. No Alaska at all. Not even a piece of it, not even a piece of the four agreements, is Alaska-oriented. And so I think you know, coupled with the non-event at the at the sustainability conference, coupled, coupling that with the event that occurred with the signing party, uh, down in Houston involving Jera, I think. I think we've got to see the writing on the wall about, about the Alaska LNG project If you can't, if you, I mean what?
Speaker 1:How Jera pitched this was look, we are realigning or rebalancing our supply portfolio from Australia-focused to an increased US focus. We are signing agreements, significant agreements for offtake agreements with US suppliers, these four US suppliers, for offtake agreements with these, with with us suppliers, these four us suppliers. We are, we are focusing on the U S, we are improving our trade relations with the U S. We have the secretary of interior and the secretary of energy down at down at the signing party talked about, talking about how important it is and how great it is to have this, to have this us focus, and and for Alaska not even to have a piece of that um is, um, is, is is very telling.
Speaker 1:Um, if you can't, if you can't, when Jarrah is rebalancing, intentionally rebalancing from Australia to the U S and it's signing agreements to to implement that rebalancing, if Alaska and and Jera is the largest LNG purchaser, uh, uh, japanese LNG purchaser if you, if Alaska can't even get a piece of that, can't even get a piece of the market for the largest LNG, for the largest Japanese LNG purchaser, um, I don't know, I really don't know what, what hope there is for, uh, for saying that that you're going to be able to bring, bring this project together.
Speaker 1:So I, that the signing party down in houston hasn't, uh, uh, hasn't gotten a lot of press up here or any press up here, but by gosh, you know, when I saw that, the headlines of it, I, uh, that that is it. That is probably more significant news for Alaska LNG than any piece of news. Including the fact that Glenn Farn had entered into contracts is probably the most significant news for Alaska LNG in the past six months, certainly, and possibly the past year, and it's not the news you would want it to be no, I mean because, logistically, again, it's a straight shot from alaska.
Speaker 2:All this other stuff is coming from the gulf coast of texas, which means it has to come through the canal or around the horn or wherever they're bringing it, and so you would think it would. Oh, it's a straight shot from alaska. You'd think it would be easy, even if it's a not, and those are all non-binding agreements. Right, those are all head of agreements, so they were the one.
Speaker 1:No, there's two up, two of them that are binding, two of them where they're binding.
Speaker 2:So, uh, and we're talking about, I mean, this is like five million tons per year. I mean this is, this is a significant amount. Even if they had just said, oh, we'll break off a million tons for a year for Alaska, I mean it would have been something. But I think everybody's looking at this and going, no, not going to happen. That's how I read it at this point.
Speaker 1:Yeah, I mean Jira isn't saying this and it doesn't. It's not all of Jira's demand, but this is a shift of 20% of Jira's demand from Australia to Alaska. The US goes from 10% up to 30% as a result of these agreements, and Jira wants to. I mean they're making the point that we want to rebalance because we want supply diversity and you've also got. I mean. So they're keeping Australia as a part of it, they've got the Middle East as a part of it, a big part of it, and now they're saying we've got the US as a big part of it. So at some point I mean Jared's going to say look, we've filled the US quota, we've filled in this portfolio of diversity, we've filled what we want out of the U S with with these agreements. We've rebalanced to get what we want out of the U S in these agreements.
Speaker 1:There isn't any. There isn't anything left or anything significant left in their, in their demand. And if you don't, if you're not I mean if this is the largest LNG purchaser in Japan and they don't have anything left for Alaska, how the heck are you ever going to bring this on? So it is major news. It is just like the biggest news out of the sustainability conference was, you know, the event that didn't happen. The biggest event for Alaska, lng is the event that did happen. That nobody's talking about in Alaska because it didn't happen up here, it happened down in Alaska.
Speaker 2:Right Didn't happen up here. Because it didn't happen up here, it happened out. Right Didn't happen up here and it didn't mention us and nobody's inferring the, the, the. The context of that, and that's part of the problem here, is that we've got to. You know this. This does not paint a rosy picture of the AK LNG project. When it's all said and done, as much as people, as much as people want and dream and I mean I was on the LNG bandwagon for many years until I really started getting into it and and looking at again the economics and the different reports and talking with you over the years and you know, I just like I would love to have it. But we've got to be realistic, we've got to make plans, you know. We got to bet, you know, base it on the worst-case scenario, and the worst-case scenario is it's not going to come through.
Speaker 1:That's not only the worst-case scenario, it's also the most realistic.
Speaker 1:Right, the most realistic scenario, yeah, exactly, and you know, every once in a while you sort of spike and say, okay, we are the closest, we are the closest to Japan, and it a while you sort of spike and say, okay, we are the closest, we are the closest to Japan, and, and it would be, you know it, you would have a savings in terms of time, you would have a savings in terms of of of money, you would have a savings, or you would have benefits in terms of security, because you wouldn't have to either go through the canal or or or go around the horn, and so, yeah, we do have an advantage there. But to have that in successive weeks, to have that not acknowledged, basically by the absence of a signing party during the Alaska Sustainability Conference, and then, sort of right in your face the following week, have Jura go down and sign four agreements, four agreements, four agreements. Four agreements Couldn't even break off, one for Alaska. Four agreements with Gulf Coast, us Gulf Coast producers.
Speaker 1:Even the most optimistic, even the most rah-rah cheerleading AKLNG person out there has got to say wait a second. Maybe this closeness issue isn't all it's cracked up to be, maybe that's not going to be the thing that saves us. Brad, 60 seconds here Final thoughts.
Speaker 1:Well, Michael, oil prices are up, but oil prices are going to come back down. Alaska LNG isn't going to save us. We've got to talk about fiscal policy as part of the education task force. We've got to put this all in the proper context of we can only spend what we have no-transcript and at ak4sbcom, Go argue with him on Twitter.
Speaker 2:He loves that. He needs more of that in his life, Brad.
Speaker 1:Thank you so much Michael as always, thanks for having me. 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 on the Weekly Top Three.
