Today’s Wall Street Journal features a defense/explanation of Gov. Sarah Palin’s treatment of the oil industry in Alaska from James P. Lucier Jr., a managing director of the D.C. forecasting/consulting firm of Capital Alpha Partners, LLC. The column, “What Palin Really Did To the Oil Industry,” compares her approach to the previous taxing and economic development programs of Gov. Frank Murkowski, whom Palin defeated in the 2006 Republican primary.

As a new governor in 2007, Mrs. Palin stepped in to address the fiscal crisis and restore accountability. Working with Democrats and Republicans alike, she chose a 25% profits tax. But in lean years the state reverts to a 10% gross revenue tax on legacy fields that do not require massive continuing inputs of new capital.

Relative to the old system, Mrs. Palin’s plan — called “Alaska’s Clear and Equitable Share” (ACES) — improves incentives for developing new resources. It ensures the state does well in boom times — as it is doing now — when oil prices are high. But it also hedges against low prices in the future by ensuring that oil companies exposed to commodity price swings don’t face a crushing tax burden when commodity prices fall.

Her plan includes an escalator clause that gives the state a larger share of revenues when oil prices rise. This is common to production-sharing agreements all over the world.

For a more critical look, here’s a business reporter’s column from the Toronto Globe and Mail, “How Big Oil went from friend to foe in Alaska.” The column points out her experience on the powerful Alaska Oil and Gas Conservation Commission.

Perhaps it’s inevitable in a campaign year with “change” as the mantra and populism as the default, but there are still political pitfalls to the McCain-Palin “we took on big oil” rhetoric. If one sector of the economy is defined as suspect, exploitative or evil, it becomes awfully easy to treat other sectors the same. “We took on Detroit. We showed the mining sector who’s the boss. Those manufacturers, we gave them what for. Corner convenience stores? We stuck it to them.” Populism debases.

Maybe all this is an overreaction to campaign rhetoric. On energy policy, it’s hard to beat the clarity and pro-energy realism of Palin’s convention speech, where she said:

Our opponents say, again and again, that drilling will not solve all of America’s energy problems — as if we all didn’t know that already.

But the fact that drilling won’t solve every problem is no excuse to do nothing at all.

Starting in January, in a McCain-Palin administration, we’re going to lay more pipelines … build more nuclear plants … create jobs with clean coal … and move forward on solar, wind, geothermal and other alternative sources.

We need American energy resources, brought to you by American ingenuity, and produced by American workers.

That’s right.

UPDATE (3 p.m.): The insightful, smart and almost always correct Kim Strassel also looks at Palin and the oil companies in her Potomac Watch column today:

Throughout it all, Mrs. Palin has stood for reform, though not populism. She thanks oil companies and says executives who “seek maximum revenue” are “simply doing their job.” She says her own job is to be a “savvy” negotiator on behalf of Alaska’s citizens and to provide credible oversight. It is this combination that lets her aggressively promote new energy while retaining public trust.

Good review of the candidates’ positions on energy from the Heritage Foundation’s Morning Bell entry on it’s Foundry blog, “Palin Powers Party Today, American Consumers Tomorrow”:

The left says it wants to reduce American dependence on foreign energy, but many of them continue to demonstrate outright ignorance on the issue. Speaker Nancy Pelosi, for example, appears to be completely unaware that natural gas is a fossil fuel that requires drilling. Barack Obama is slightly better. He says he wants to drill for more gas and he says he wants to build a natural gas pipeline from Alasaka, but he never has actually done anything to make these dreams a reality. Palin’s record is different.

For years former-Alaska Gov. Frank Murkowski tried to strike a deal with the major oil companies to construct a new natural gas pipeline. After Palin defeated Murkowski, she bypassed the oil companies entirely and struck a much better deal for the taxpayers with North America’s largest pipeline operator, TransCanada, a Calgary-based company. The pipeline is set to be completed by 2018 and will give Americans access to 35 trillion cubic feet of gas that need to be drilled from Alaska’s North Slope. The pipeline will ship 4.5 billion cubic feet of gas a day, through Canada, to U.S. markets. That represents about 7% of current U.S. demand. This pipeline will lower American consumer energy bills. As Palin said last night: “Families cannot throw away more and more of their paychecks on gas and heating oil.”

Palin wins definite points for being pro-development, pro-energy, pro-economic-growth.

And Heritage’s formulation of Alaska’s energy politics is one we prefer. Far preferable — rhetorically, politically and economically — to emphasize that you “struck a much better deal for the taxpayers” — than boasting about beating back the oil companies, the kind of talk that just feeds populist know-nothingism.

Given the confusion prompted by the varied suits against the Department of Interior regarding its efforts to protect the polar bear — is that vague enough? — allow us to link to our legal department’s description of the litigation from the business associations, including the NAM: American Petroleum Institute v. Kempthorne

American Petroleum Institute v. Kempthorne
(U.S. District Court for the District of Columbia) — Environmental
Whether polar bear regulation should deny Alaskan industry greenhouse gas emissions exemption that applies to other states.

On May 15, the Department of the Interior issued an Interim Final Special Rule designating the polar bear as threatened under the Endangered Species Act, based on its determination that global climate change, resulting from increased concentrations of greenhouse gases in the atmosphere, threatens to injure the bears’ habitat by reducing polar ice. As part of this rule, the Department provided an exemption for greenhouse gas emissions, since they are part of a worldwide phenomenon than cannot be traced to particular activities in particular locations affecting the bears.

This exemption applies to greenhouse gas emissions in all states except Alaska. On August 27, the NAM joined with the American Petroleum Institute, the U.S. Chamber of Commerce, the National Mining Association and the American Iron and Steel Institute in filing a complaint challenging the Department’s omission of Alaska from the exemption. Manufacturing and other business operations in Alaska that may produce greenhouse gases should not be treated differently than those of companies in the other 49 states. This “Alaska Gap” exposes Alaskan operations to increased permitting burdens and/or the risk of enforcement by government authorities and citizen suits.

Our lawsuit challenges the Alaska Gap as arbitrary and capricious, since the best scientific data in the rulemaking record do not demonstrate enough of a connection between specific actions resulting in emissions and an effect on the polar bear.

The NAM supports the exemption for all states from permitting for greenhouse gas emissions that might affect polar bear habitat, not just every one but Alaska. The NAM is not challenging the decision to designate the polar bear as a threatened species.

Related Documents:
NAM complaint (8/27/2008)

API’s news release is here.

Jonathan Adler, a Case Western Reserve law professor, comments at the Volokh Conspiracy, noting first that the suit challenges the differential treatment of the states. Adler: ”Not having read the briefs (yet), this seems to me like a more fruitful avenue of attack than a frontal challenge to the listing itself. Overturning a listing decision is quite difficult, and I don’t expect any of the lawsuits to be successful on that front.”

 P.S. The Alaska Gap? Do they sell mukluks?

A correction in The Washington Post:

Correction to This Article
An Aug. 31 A-section article incorrectly said that the American Petroleum Institute and four other business groups seek to challenge the listing of the polar bear as a threatened species. The groups are trying to enjoin the federal government from implementing a rule they call the “Alaska Gap,” which subjects projects in Alaska to extra scrutiny. The federal government issued the rule in May in conjunction with the announcement of the polar bear’s protected status.

Yes, just because Alaska sues and several trade associations sue, doesn’t mean we’re suing together.

The suit in which the NAM is participating is available here: American Petroleum Institute v. Kempthorne. API issued a news release, stating it sued “because it believes the U.S. Interior Department’s determination that the Endangered Species Act is ‘not the right tool to set U.S. climate policy’ makes sense, and that the interim final rule issued by the Department needs to be expanded to include Alaska as the Act is implemented. API member companies are not challenging the listing of the polar bear as a threatened species.”

Seems pretty clear.

P.S. The Post’s online style is admirable: It put the correction right at the top of the original article.

Wall Street Journal, “Early Signs Show Gulf’s Energy Facilities Held Up”

The weakened Hurricane Gustav hit energy-producing facilities that were more rugged and better prepared to resume operations than they were three years ago during Hurricane Katrina.

Turbulent weather prevented a damage assessment Monday, and industry officials cautioned that in previous hurricanes, initial optimism soured when operators began to test equipment.

Houston Chronicle: “With little damage to oil patch, prices dip“:

The oil and gas industry breathed a tentative sigh of relief Monday after preliminary reports suggested Hurricane Gustav did little damage to energy facilities both onshore and off, helping send oil prices sharply downward.

Early updates from Gulf of Mexico drillers and oil and natural gas producers were “very promising,” with no major damage reported, said Lars Herbst, regional director for Minerals Management Service, the Interior Department office that regulates the offshore oil and gas industry.

MMS has more on its homepage. For regular updates, you can’t go wrong with The Oil Drum.

The Washington Post opinion writers recognize that printing the newspaper at the company’s two printing sites (College Park, Md., and Springfield, Va.) or publishing a heavily trafficked website (WashPost.com) requires dependable electricity and transmission lines. Hence today’s editorial, “Across State Lines“:

IT’S NOT JUST Northern Virginia’s roads that are gridlocked. The region’s power lines are becoming increasingly overloaded, and blackouts are likely by 2011. A proposal that would bring cheaper electricity to Virginia while increasing the region’s energy capacity is now threatened. Two Pennsylvania judges recommended last month that a key portion of a $1.3 billion power line between the two states not be built. If the recommendation becomes reality, Virginians should prepare for more expensive, less reliable electricity.

The judges, Michael A. Nemec and Mark A. Hoyer, contend there isn’t a need for the Pennsylvania portion of the 240-mile line. They argue that consumers could reduce energy use and that power companies haven’t adequately examined alternatives.

We agree that conservation and alternative energy are important. But power lines in the Washington area already operate at, or near, maximum capacity most months. To avoid blackouts in Virginia, residents would have to curb energy use by 40 percent in the next few years.

The Associated Press covers the administrative judges’ ruling in this recent article, “Pa. judges deal setback to major new power line.” Allegheny Energy issued a news release on August 21, with a comment:

“We are extremely disappointed in this administrative recommendation, which runs counter to the evidence presented. PJM Interconnection, the independent regional organization responsible for transmission planning, determined that this line was necessary for the reliable supply of electricity to homes and businesses throughout the Mid-Atlantic region, and mandated its construction,” said Paul J. Evanson, Chairman, President and Chief Executive Officer of Allegheny Energy. “We intend to vigorously pursue construction of this line with the Commission, particularly the one-mile section that is essential to regional reliability.”

Thankfully, the much maligned Energy Policy Act of 2005 included legislative language intended to overcome state obstacles to siting and construction of transmission lines.

As for the Post’s editorials, isn’t it inconsistent to always be yammering for expanding the regulatory and taxation system to control greenhouse gas emissions while at the same time (as above) demanding more electricity generated from coal? Even if editorial boards are, by definition, institutionalized cognitive dissonance?

(Bumped to the top: NAM’s executive vice president, Jay Timmons, has been blogging this week from the National Democratic Convention in Denver. Today, Timmons reacts to Sen. John McCain’s selection of Sarah Palin as his vice presidential running mate, drawing on his experience as the former executive director of the National Republican Senatorial Comimttee.)

While the pick of Alaska Governor Sarah Palin was a surprise to many, it was clearly a calculated move by Senator John McCain to also make history in this year’s election. A trailblazer for women, she could be an attractive alternative for those who had believed Hillary Clinton would have been the strongest pick for Barack Obama.

Governor Palin, a star of pro-life party members, will help ease the concerns of social conservatives who were worried McCain would choose a pro-choice Republican (or Democrat) to be his second in command. She is a strong executive (the only candidate for President or Vice President this year who has such experience) and does not shy from difficult decisions. She won admiration from her fellow Alaskans when she returned to the job of Governor last year just three days after giving birth to her fifth child.

She has adhered to a fairly conservative fiscal policy as well (although Alaska has quirky budgetary provisions). On energy, Governor Palin could be helpful in convincing Senator McCain to support development on the north slope of Alaska near ANWR.

No stranger to talking tough challenges, she defeated an incumbent Governor – a fellow Republican – in the 2006 gubernatorial primary. This was the same Governor who appointed her to head an agency in his administration, a job she later resigned in protest over her concern that ethical standards were not being followed.

The Governor is an incredibly engaging public official and will be a strong advocate for a McCain presidency on the trail. In 2004, I sat down with her in a local restaurant near Wasilla, Alaska, to discuss her interest in running for the U.S. Senate against fellow Republican and incumbent Lisa Murkowski. Armed with polling information and precinct data, I was prepared to discuss her thoughts on whether she could win the race. She was only interested in talking about how she thought she could make an impact on national public policy – a focus on fiscal discipline, lower taxes on working Americans and strong support for the military and exporting freedom.

I was thoroughly impressed. And Americans are likely to be impressed with her story and record as well. John McCain has chosen wisely.

From an Anchorage Daily News profile of Todd Palin, the husband of Alaska Gov. Sarah Palin, Republican candidate for vice president.

White-collar jobs in law, education or health care are typical among the current crop of first spouses, but Palin spent nearly 20 years as a blue-collar employee in the oil fields of the North Slope. And every summer he heads west to his birthplace in Dillingham to work the Bristol Bay commercial salmon fishery from his property on the Nushagak River.

A lifetime of manual labor in the state’s two largest and most physically demanding industries is helping Palin carve out his role as Alaska’s first spouse, or “first dude,” a nickname he has in common with the Kansas governor’s husband, Gary Sebelius.

Like other first spouses around the country, Palin has been asked to champion an array of causes or institutions since his wife took office in December.

His favorite is steering young Alaskans toward stable jobs in the oil and gas industry. It’s a singular choice among his counterparts, whose pet issues include schools, public health, domestic violence, poverty or the arts.

It’s great to see any person in the public eye pushing industry as a good place to build a career.

We do not have an NAM voting record to post for Alaska Gov. Sarah Palin, obviously, and are really aware only of her strong record in support for domestic energy development. (Although there might be a little institutional leaning toward governors around here, too.)  On economic issues, we’re heartened by Larry Kudlow’s praise for her, as Larry is an avid, tireless, smart, good supporter of the U.S. manufacturing economy and global competitiveness. Here’s what Kudlow said this a.m. at National Review Online:

McCain-Palin? I’ll Be Thrilled [Larry Kudlow]

If the rumors about Sarah Palin are true, I will be thrilled. She’s been my first choice all along. She’s a strong pro-life, supply-side, drill-drill-drill-ethics reformer who has worked hard to change the Ted Stevens culture-of-corruption problem in Alaska. A cheap-shot Democratic legislative investigation of Palin appeared to slow her momentum down a few weeks ago. But John McCain would electrify everyone if this choice pans out.

Here and here are the transcripts of my most recent interviews with Gov. Palin on K&C.

08/29 09:39 AM

And here’s Palin from a recent interview on energy with Investor’s Business Daily:

Palin: Alaskans are frustrated because there is opposition in Congress to developing our vast amount of natural resources. We want to contribute more to the rest of the United States. We want to help secure the United States, and help us get off this reliance of foreign sources of energy.

It’s a very nonsensical position we’re in right now. We send President Bush and Secretary (of Energy Sam) Bodman overseas to ask the Saudis to ramp up production of crude oil so that hungry markets in America can be fed, (and) your sister state in Alaska has those resources. But these lands are locked up by Congress, and we are not allowed to drill to the degree America needs the development.

From the AP, “Industry groups file lawsuit over polar bear rule“:

WASHINGTON (AP) — Five industry groups have sued the Interior Department over a rule to protect the polar bear that they say unfairly singles out business operations in Alaska for their contribution to global warming.

Groups representing the oil and gas, mining, and manufacturing industries asked a federal judge Wednesday to ensure that laws designed to protect the bear, which was recently designated a threatened species, are not used to block projects that release heat-trapping gases in the state.

The American Petroleum Institute was joined by the U.S. Chamber of Commerce, the National Mining Association, the National Association of Manufacturers and the American Iron and Steel Institute in the lawsuit, which explicitly challenges three words — except in Alaska — that appear in a 62-page rule issued in May.

A copy of the suit, American Petroleum Institute v. Kempthorne, is available here.

API’s statement is here, and it’s a very useful pre-corrective:

The oil and natural gas industry is committed to the conservation of the polar bear and other marine mammals. Companies active in Arctic region energy exploration implement polar bear mitigation and avoidance programs, and they provide funding and logistical support for important polar bear studies carried out in the United States and in Canada. API filed a lawsuit in the U.S. District Court for the District of Columbia yesterday because it believes the U.S. Interior Department’s determination that the Endangered Species Act is “not the right tool to set U.S. climate policy‟ makes sense, and that the interim final rule issued by the Department needs to be expanded to include Alaska as the Act is implemented. API member companies are not challenging the listing of the polar bear as a threatened species.