June 17, 2025 • 50 mins
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.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:10):
Hi, this is Brad Keithley, managing Director of
Alaskans for Sustainable Budgets.
Welcome to the weekly top threethe top three things on our
mind here at Alaskans forSustainable Budgets for the week
of June 16th 2025.
The weekly top three is aregular segment on the Michael
Duke Show for SustainableBudgets for the week of June 16,
2025.
The weekly top three is aregular segment on the Michael
(00:31):
Duke Show.
The show broadcasts on bothFacebook Live and YouTube Live,
as well as via streaming audiofrom the show's website weekdays
from 6 to 8 am.
I join Michael weekly in thefirst hour of Tuesday's show
from 6.10 to 7 am for adiscussion between the two of us
about our three issues.
We post the podcast of ourdiscussion following the show on
(00:51):
the Alaskans for SustainableBudgets Facebook, youtube,
soundcloud, spotify and Substackpages.
Also on the Alaskans forSustainable Budgets website, as
well as the projects page onnational blog site mediumcom.
You can find past episodes ofthe weekly top three also at the
same locations.
(01:11):
Keep in mind that, in additionto these podcasts during the
week, you can also follow andparticipate in the discussion
with us of these and otherissues affecting Alaska's fiscal
and economic conditions byfollowing us on the Alaskans for
Sustainable Budgets Facebookpage and through our posts on
Twitter.
(01:32):
This week, our top three issuesare these First, we discuss
where oil prices are likelyheaded and how Alaska could
reduce the fiscal rollercoasterour current budgetary approach
creates.
Second, we discuss one issuethat we believe should be at the
heart of the coming educationtask force and its subsequent
(01:54):
recommendations.
And third, we examine what arecent decision by JIRA Japan's
largest LNG importer, japan'slargest LNG importer means for
Alaska LNG.
And now let's join Michael.
Speaker 2 (02:09):
All right.
Well, let's tackle this.
Oil prices.
You know, we know, that nextyear there's a predicted $1.5
billion budget, and that wasbased off some higher oils.
And then oil started to tankand it looked like it was going
to slide down into the 50s.
And then, of course, israel andIran got into the little thing,
and so now it's man, I feellike I'm on a roller coaster.
(02:30):
This is like an e-ticket rideat Disneyland.
What, what is you know whereoil price is going?
What does it mean for us?
Speaker 1 (02:38):
Now, this is the segment that I'm absolutely
going to get wrong, because, youknow, predicting oil prices is
is a fool's errand.
Um, and I'm not really tryingto predict the precise price,
that would truly be a fool'serrand, but I think I think it's
useful to talk about somefundamentals, uh that that we
(02:59):
see in the oil markets, thatthat are useful to remind
ourselves of when these rollercoasters get going.
And the fundamentals are thefundamental is prices set by
supply and demand.
We always have to keep that inmind, that we can have all these
(03:20):
things going on in the world.
We can have all of the bombsgoing off or we can have all of
the tariffs that are out on inthe world.
We can have all of the, all ofthe you know bombs going off or
we can have all of the you knowtariffs that are out there in
the world.
That was, that was the storylast week, before this started
uh, going out that going on outthere.
But it's fundamental supply anddemand and the and the and the
fundamental supply side of thisis that Saudi has increased
(03:47):
production over the last fewmonths.
They've increased, they'veraised the OPEC ceiling over the
last few months.
Additional supply has come ontothe market and that additional
supply has softened pricebecause demand hasn't moved much
.
That additional supply hassoftened price in a way that got
(04:10):
us down into the 60s.
What's going on with Israel-Iranis what always goes on when you
have something like this in theMiddle East it's concern about
supply.
Supply Is there going to besome activity that disrupts
supply in a way that sends usback to 1973, the Saudi oil
(04:32):
embargo, or 1979, the Iranrevolution?
That seriously disrupts supplyin a forces price up, and what I
think we're seeing is that, forall of the attacks that are
going on, for all of the damagethat's going on, supply really
(04:56):
isn't being impacted.
Israel seems to have gone outof its way not to attack Iran's
export capabilities.
They've attacked energy insideIran, but it's domestic energy,
it's internal energy focused,that Israel has attacked.
They've not attacked Iran'sexport pipelines or Iran's
(05:19):
export terminals, and Iran, forall of the bluster and all of
the things that it says, has notdisrupted 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
(05:43):
think we're seeing is themarket going okay.
There's risk here and we'recontinuing to assess the risk
that this will, that this willramp up in some way, but I think
the market is is sort of beingcapped off by the realization
that that there's not, thatthere's not been supply
(06:06):
disruptions to this point.
There was an FT articleFinancial Times article that I
think was very insightful onthis point, and it has a
paragraph that I think is usefulto read and keep in mind.
The interplay of geopoliticaluncertainty, oil prices and
macroeconomics is rarelystraightforward, as some useful
research from the EuropeanCentral Bank published in 2023
(06:29):
indicates.
It points out that Brent crudeprices leapt by 5% in the
immediate aftermath of 9-11 asinvestors priced in the chance
of war in the Middle Eastdisrupting supplies, but they
were down 25%.
But oil prices were down 25%within 14 days of 9-11, as fears
that a slowing global economywould weaken oil demand came to
(06:52):
the fore In the two weeksfollowing Russia's invasion of
Ukraine in February 2022, rentprices rose by 30%, but they
were back at their pre-invasionlevel eight weeks later.
So I think the lesson we takefrom this, or the lesson that
the market takes from this, iswhen there's an event that is,
(07:15):
in a major supply region or in amajor demand region.
When there is an event thatcould theoretically put supplier
demand at risk, the market'sgoing to react and it's going to
jump, and it's going to jumpeither one way or the other in
response to that event, to use aprobably inappropriate metaphor
(07:42):
.
But as the smoke clears and andyou begin to see whether there
is actual damage to supply ordamage to demand, um, the market
sort of sort of readjusts andwe're we're seeing that.
We're seeing that to somedegree in the markets.
I pulled up the markets thismorning and the December uh 25
(08:04):
or the, the midpoint uh 2020,the midpoint fiscal year 26,.
Which is the way we think aboutit in Alaska.
The midpoint fiscal year 26 oilprice right now, as of this
moment, futures price is $71.
The midpoint FY27, the yearafter that is $68.
So I think you see the marketsort of still hiked up as a
(08:31):
result of these concerns aboutwhether there's going to be a
disruption to supply, but notoverly spiked, not convinced
there's going to be a long-termdisruption to supply.
Spiked, not convinced there'sgoing to be a long-term
disruption to supply.
And I think you've also seen itsort of coming off the highs
(08:53):
that spiked to shortly after thebeginning of the Iraq-Israeli
or the Israeli attack on Iraq.
So we're in for a continuedroller coaster.
Yesterday, the big news was thatthere were ships on fire in the
Arabian Gulf and all of asudden, you know, oh my God,
there's been an attack.
We're going to start seeingthese attacks on shipping in the
(09:14):
Gulf and, as a consequence,there's going to be disruption
of supply.
Well, as the day wore on, itturned out that what had
happened is two ships hadcollided.
There wasn't an attack Right,and while the collision may have
been a result of navigationaldisruption due to the war, it
(09:36):
didn't look like it waspersisting.
That navigational disruptionwas going to persist in a way
that was going to put shippinggenerally at risk.
So you're going to see thesespikes during a day, or maybe
even during a week, butlong-term it's supply and demand
(09:56):
and long-term, opec hasincreased supply, which is what
led to the softening of priceinto the 60s and some people
talking about going into the 50s.
Opec has increased supply.
They haven't backed off that asa result of this, and so I
think you're going to see ifthere's no additional activity
(10:16):
as a result of the war thatresults in damage to supply.
I think you're going to seeprices continue to soften back
to the level, toward the levelsthat we were at before the war
started, as time goes on, whatdoes this mean for Alaska, I
mean?
Speaker 2 (10:34):
and when you say, see the prices soften again?
Trump's vision and goal was oilin 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 orsomething like that, so we
weren't quite there yet.
But what does it mean forAlaska?
Speaker 1 (10:52):
I think it means that unfortunately that the spring,
unfortunately from a revenuestandpoint, unfortunately from a
budgetary standpoint I'm alwaysreminded by friends that it
means different things on thegasoline side but unfortunately
from the budgetary side, I thinkwe're going to see prices come
(11:14):
back down into the 60s unlessthere's some serious supply
disruption, long-term supplydisruption that starts occurring
as a result of the war.
I think we're going to seeprices start to come back down
where they were before, whichsort of reflected the supply
demand, the pre-war supplydemand balance.
And if there's no, if the waris not resulting in a
(11:34):
significant supply disruption, Ithink we're going to see it
come back down into that rangethat it was, which is in the
sixties, and the market is goingto sit there waiting for OPEC
to see if OPEC continues toraise the levels.
What is going on with OPEC is,during COVID, opec brought its
(11:56):
caps down significantly,restricted supply significantly
in an effort to, as COVID,destroyed demand, in an effort
to balance supply demand at aprice point that was in the 70s,
and so OPEC brought the capsdown.
What we've been seeing over thelast few months is OPEC bringing
(12:16):
the caps back up, essentiallyto pre-COVID levels, and they
aren't finished doing that yet.
They've sort of brought it uppart of the way, but they
haven't finished doing that.
So I think what of brought itup part of the way, but they
haven't finished doing that.
So I think what we'll see isprices come back down.
If there's no long-term supplydisruption coming out of the war
, I think we'll see prices comeback into the 60s, sort of
(12:36):
settle back into the 60s, andthey'll sort of sit there
waiting on what OPEC's going todo next in terms of continuing
to lift the caps back topre-COVID levels.
So the short answer is I thinkwe're going to continue to see
budget softness in Alaska.
Speaker 2 (12:54):
So no quick fix to our budget woes for next year
with that deficit, because we'llprobably be back here within a
few weeks if this conflictdoesn't escalate or attack any
of the supply lines or anythingelse.
So, all right, interestingstuff.
Brad Keithley, alaskans forSustainable Budgets.
This was actually one of thethings that I was wondering
(13:16):
about as this attack came out.
I was thinking, huh, what doesthis do to oil prices?
That sounds a little cruel, butI'm just like huh, what is this
due to oil prices?
I mean, that sounds a littlecruel, but I'm just like huh,
what is this due to oil pricesin Alaska?
Speaker 1 (13:29):
That's how Alaskans think, isn't it, Ooh war?
Speaker 2 (13:31):
Yeah, ooh, I was just wondering I mean, you know,
worried about World War IIIMaybe, but yeah, it was really
what was going on with our oilprices.
I thought that was a greatexplanation because I've been
wondering about this and youknow, I know that things are
cyclical and I know that after Iknow that after the Russia
attack, that oil pricesstabilized, you know, in a
(13:53):
fairly short period of time.
But I thought that was that'san interesting take on how all
that go, how all that is goingto lay out again.
This is just another one ofthose things where there was,
you know, maybe there was ahopeful sigh of relief in Juneau
and then they realized thatmaybe it's not going to save all
that they're going to do.
We're going to have to dosomething about this?
Speaker 1 (14:13):
Yeah, it really it was.
It added some a lot ofconfusion to the governor's veto
of, or the line item veto of,education on K through 12
spending, citing the state'sfiscal outlook depressed fiscal
outlook or lower fiscal outlookand then coming out with the
(14:40):
revised revenue forecast thatdropped prices down even further
than they had been in thespring revenue forecast.
And the next day or maybe itwas later that same day israel,
iran starts um, and prices spikeand and, and so you have all
those you have a lot of commentsout there of of you know
keyboard warriors that say, ohmy god, you know governor vetoes
, but now prices are way up intothe 70s and you know we have
(15:01):
all this extra revenue over whatthe spring forecast.
How could he have done that?
Uh, well, of course he didn'tknow.
Speaker 2 (15:07):
it's time yeah, like netanyahu called don levy and
said by the way, your oil pricesare going to spike, so don't
veto anything because we'reabout to strike iran.
Speaker 1 (15:15):
I mean, you know, come on, it's ridiculous but but
even if you'd known that, evenif you'd done that, you looking
at, I mean, you've got tounderstand supply disruptions
and you've got to focus onsupply disruptions.
And I will say that Israel andIran Israel in its precision of
targeting and Iran in itsresponse have sort of gone out
(15:40):
of their way not to hit supplyissues.
I mean, israel has hit internaldomestic supply sources, energy
supply sources for Iran, both onthe gas side and the electric
side, certainly, and somewhat onthe oil side, but Israel's gone
out of its way not to attackthe export facilities and Iran's
(16:02):
still continuing to export andships are picking it up and
taking it out and it just keeps,keeps on going.
So as long as that happens, uhas, 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 thathappens and the market sort of
sorts out, well, maybe, maybe wearen't going to have, you know,
supply disruptions here.
(16:23):
You'll, you'll see the thathappens and the market sort of
sorts out well, maybe we aren'tgoing to have supply disruptions
here You'll see the marketrespond in a fairly short period
of time.
It doesn't take the market longto absorb that information and
then to incorporate it intoprices.
Speaker 2 (16:39):
Well, again, like I said, I hear something like this
and all I remember is that oldbumper sticker that said you
know God, please grant usanother pipeline.
We promise not to piss this oneaway.
It's like we're constantlywaiting to be saved by some kind
of world event that changeseverything instead of changing
our own behavior.
Speaker 1 (16:59):
That's the key here, yeah, here, yeah.
And the other thing, michael, Imean I'm reminded of a
discussion we had last week orthe week before we put our.
We Alaskans put ourselves inthis position by predicating our
budget on, on, on the thefutures market of the moment.
Right, um, you know, we, wepredicate spending, we predicate
(17:20):
revenue and then spending onwhatever the futures market is
telling us.
And, as I, as we've talkedabout on the show before, what
we should be doing ispredicating revenues on historic
, on an average of historicprices, just like we do on the
PFD and just like we do on thePOMV draw.
We ought to be looking at whatwe've had in the past.
Speaker 2 (17:41):
Welcome back to the program.
The Michael Luke Show continues.
It is Tuesday, which means it'sTruth Tuesdays, the weekly top
three from Brad Keithley, fromAlaskans for Sustainable Budgets
.
We continue on with ourdiscussions.
Number two Brad says he's notgoing to hold his breath on the
conclusions from the EducationTask Force.
(18:02):
I mean gasp.
I'm shocked when you look atthe makeup of the task force.
What are they going to discover?
Brad, give us your thoughtshere.
Speaker 1 (18:11):
So one of the pieces of the education bill that
passed over the governor's veto.
I mean we've got a lot ofvetoes going on here.
We've got a lot of bills goingon, but we'll recall that there
was an education bill that setthe $700 BSA increase that the
governor then line item vetoedin the budget.
But the fundamental House billthat set that passed then was
(18:36):
vetoed by the governor, thenpassed over veto and enacted
over the veto and so that billstill sits out there as the law
and one of the provisions ofthat that we mostly talked about
the increase in the BSA in thatbill.
One of the provisions of thatset up a task force, an
education places where you knowsort of the, in some ways, the
(19:13):
fundamental truths of theeducation system.
Does it need more funding?
Where does it need more funding?
Does it need reform, policyreform when does it need policy
reform?
Now the task force has acredibility issue right off the
get-go because of the members.
You've got some verypro-education members that are
(19:34):
in the majority on the taskforce and limited minority
membership.
There's six members.
Four come from the majority,two from the majority in the
majority, two from the majorityin the Senate, two from the
majority in the House, as youwould expect, the House
Education Chairman of bothbodies are on the task force and
(19:55):
very pro-education members fromother committees are on the
task force for the majority.
It's Mike Kronk, uh, on fromthe Senate, from the minority,
and, uh, jason Ruffridge, on the, on from the from the house.
So you can sort of guess wherewhere the conclusions are going
(20:16):
to be, and so there's acredibility issue with the, with
the task force, right off thebeginning.
But here's, here's somethingthat I think the task force
actually could raise awarenesson and include in its
conclusions, and, oddly enough,the idea for that came from an
(20:36):
opinion piece by a couple ofmembers of the Well, the
chairman and a member of each ofthe Anchorage and Fairbanks
(20:58):
school boards, who wrote anopinion piece that appeared in
the ADN and the Dunleavy'seducation veto shows a
leadership crisis and Alaska'surgent need for a fiscal plan,
and it's the last part of thatAlaska's urgent need for a
fiscal plan that I think isimportant.
(21:19):
Actually, the editorial thatthey wrote doesn't go on to
describe what they really meanby that.
It gets mentioned again only inthe last paragraph of the op-ed
, but it triggered in my mind,something that the Education
Task Force can do and that isframe the education issue as a
(21:42):
sub-issue of the overall fiscalissue the state is facing.
I don't think you're ever goingto get resolution on the K-12
issue.
I don't think you're ever goingto get resolution on any issue
that involves any long-termresolution on any issue that
involves the budget involvesspending, until you have a
(22:04):
fiscal plan in place.
As long as we're floating along, dependent on what the futures
market says about oil, dependentupon what the permanent fund
corporation investment policy iswith respect to the permanent
fund, as long as you're floatingalong with sort of a very
(22:25):
unstable fiscal plan, I thinkyou're always going to have
unstable policy and unstablespending on the other side of
the ledger.
Those that depend upon therevenue side for spending to
fund spending are always goingto have uncertainty as long as
(22:46):
there's uncertainty on the onthe revenue side.
So I think I think it would bevery helpful in I guess I'm
really appealing to to Cronk andRuffridge to make this point
during the uh, during thedeliberations of the body.
I think it would be very helpfulif the education task force
said look, one of thefundamentals that we've got to
(23:08):
resolve before you can resolveeducation is to resolve the
state's fiscal situation.
One way or another.
You've got to lay down a solidbase on the fiscal side, on the
revenue side, before we reallywill get resolution to what's
going on over on the spendingside K through 12 or any other
(23:30):
category of spending you want toaddress.
We've got to get a stable baseresult on the revenue side and
I'm not arguing for increasingrevenues or lowering revenues or
any of that.
You've got to get a solid baseon the revenue side and I think
(23:52):
part of that is you've got to golook at oil taxes.
I think oil taxes are below theconstitutional requirement of
maximum contribution and I thinkyou've got to go look at oil
taxes.
I think you've got to go lookat what the permanent fund
corporation is doing in terms ofits investment policy.
(24:12):
I think we're leaving 500, 700million, maybe a billion dollars
on the table annual revenue interms of revenue from the, from
the investment policies that the, that the permanent fund
corporation is pursuing.
I'm not suggesting that we havethe education task force
undertake to write a new oil taxcode or to redirect the
(24:40):
permanent fund corporation in away that improves its investment
policy.
That improves its investmentpolicy.
But I am saying that I think itwould be highly useful for the
Education Task Force to say thatone of the foundations of
getting K-12 or any spendingpolicy right is getting a very
stable fiscal revenue side inplace, and I think that would be
(25:06):
, I think that would be ofservice coming from this task
force.
Now, do I think they'll do it?
Uh, do I think the task forcewill?
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 andRuffridge are, are, are there to
contribute anything, I think itought to be that sort of
(25:30):
fundamental concept that we'vegot to get a fiscal plan, a
solid fiscal plan, in placebefore we really can address any
of these issues on the spendingside that people want to
address side that people want toaddress.
Speaker 2 (25:48):
No, and I think that this has been the problem.
Again, this is the foundationof any home or pyramid or
structure or whatever needs tobe strong.
And that's the problem is thatour financial foundation is all
over the place.
We have no long-term plan, orevery outlook is only till next
year, maybe the year after, ifit's forward looking at all.
There is no 10 year.
(26:09):
There is no 10 year plan, thereis no long term, you know, on
any of this stuff.
And so, yeah, is it surprisingthat we run around like our
hair's on fire every everysession, to some new crisis?
No, because they can't decide.
And again, this all goes backin my mind to you know, we have
(26:29):
a serious spending problem.
Now, can we cut our way to thesolution?
Probably not logistically.
It would have to be some kindof step-down approach.
But you know, the bottom lineis, until we acknowledge that,
we're not going to fix it.
Whether we replace it with newrevenues or whether we cut to it
, until we even acknowledge it,it's not going to happen.
Speaker 1 (26:53):
Yeah, and certainly we would get pushback from other
members of the EducationCommittee Task Force on that
issue.
They would say, no, we have arevenue problem.
My point here is what Alaskahas done through through various
steps focusing on the, on thefutures market being one of them
(27:14):
, the oil futures market beingone of them is we have a very
rollercoaster, a very unsolid, avery unstable fiscal base and
and as a consequence of that andas we discussed in the show a
few weeks ago, as a consequenceof that, when you have these
spikes in revenue, you getspikes in spending, you get new
(27:38):
programs, you get new capitalprojects underway, you create
new expectations, you create newconstituencies that sort of
don't go away.
When, when we, when we, go downthe other side of the roller
coaster and revenue sort ofmelts away, you've still got all
of these programs, you stillhave got all this expectations
of capital spending.
(27:58):
You've still got all of these,all of these constituencies that
are still out there, that gotbuilt up during the peak periods
, um and um and and you know,and they continue pressing even
though revenue is melting away.
I sort of regardless of and it'shard to say this because I know
people come with their ownpreconceived notions about what
(28:20):
the solution is.
But sort of, regardless ofwhether it's a spending problem
or a revenue problem, we justneed to have a solid base, a
solid base of revenue and have abase that doesn't go on this
roller coaster when oil futuresprices or oil prices do what
they do.
Structure that takes any excessrevenue over the base and puts
(28:54):
it into some sort ofstabilization fund to have it
there to balance things out whencurrent revenues go away
because oil prices go down.
Until we have that sort ofsolid base and see what that
baseline is and then buildspending off that baseline.
Until we have that, we're goingto continue to have this debate
and we're going to continue tohave.
(29:16):
You know, people say, oh, weneed more spending, or we need
less spending, or we need thisor we need that.
We need to be more like anormal state in the sense of
having a baseline, of a regular,predictable, solid baseline of
revenue and start from there andthen see what spending fits
(29:40):
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 havethat sort of solid base.
One of the one of thefundamentals of being able to
figure out what to do on thespending side whether we have
(30:01):
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 anexpectation of a solid base on
the revenue side.
Speaker 2 (30:14):
Well, we know how much they pay attention to task
force, right?
I mean the fiscal policyworking group task.
I mean they did a lot of work,spent a whole summer that they
can't get back and yet theypretty much ignored everything
that came out of that.
So maybe we can just ignorewhatever comes out of this group
.
I don't, I don't know it's.
It would be nice to see anactual you know commentary that
(30:36):
says, hey, we need to have afiscal plan and have somebody
actually follow up with it.
That's been part of.
The problem is that you knowit's just, it's never been
followed up on Afterwards.
We've probably gone through adozen of these different you
know working groups or taskforces or special committees or
whatever, and they just neverfollow through on it.
(30:56):
Why?
Because it's easier to do whatyou'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, onthis.
Speaker 1 (31:10):
Well, we do have the Fiscal Policy Working Group.
Jesse Keel is on that.
Jesse Keel is on this taskforce.
A hope would be that he wouldbring the learning from the
Fiscal Policy Working Group overto the task force and talk
about the need for that solidbaseline.
Whether Jesse's going to dothat is probably not in the art
(31:31):
of the possible, but I do thinkCronk and Ruffridge can.
I think that's what they can be, if they can be additive about
anything.
They can be additive abouttalking about needing to have a
solid fiscal base before wereally can have a solid
discussion about educationpolicy or anything else.
Speaker 2 (31:50):
Well, you'll be happy to know, brad, that Mike Kronk
is in the chat room and sayingBrad, that is exactly what I
told every single superintendentthat came into my office and
asked us to help or if theycould help.
I told them to help usimplement a fiscal plan.
I mean, I hope it happens.
I, you know, again cautiouslyoptimistic that maybe something
(32:12):
will come out of this.
But again, two members of theminority versus the rest of them
and, looking at the rest of themakeup, they're all very much
pro spend, spend, spend.
I don't know.
I don't know how muchhorsepower they're going to have
in that room when it's all saidand done.
Speaker 1 (32:26):
Well, senators, start every meeting, end every
meeting with that statement andat some point, it will be enough
that people can't ignore youabout it.
I do think that it could bevery helpful to continue to
remind this task force, or anytask force, of the need for a
(32:46):
solid, solid, predictablebaseline that doesn't get spiked
when oil prices go up.
There's a way of taking thatexcess money and putting it into
a stabilization fund, asopposed to creating more
constituencies by spending it.
I think there's a lot ofhelpfulness that can be used by
(33:09):
reminding this task force andothers that we need that as a
baseline before we really canhave useful discussions on
spending policy.
Speaker 2 (33:18):
Yeah, I mean, that's the thing I mean.
Like I was trying to sayearlier, until we acknowledge
that there's a problem, we'rejust going to keep doing.
What we're doing and that'swhat 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 billionunderwater, no big deal.
(33:38):
We'll just take it out of oursavings account and it'll be
fine next year, and then itwasn't fine the next year and it
wasn't fine the next year.
And every year it was $3billion, $4 billion that they
draw from CBR until there was nomore money, and then then they
just again it's.
It's a classic game ofavoidance of dealing with the
issue that you're spending moremoney than you are taking in.
(33:59):
Period, full stop, end ofsentence.
And they just they don't wantto even acknowledge that.
Speaker 1 (34:05):
That's part of the problem and they just, they
don't want to even acknowledgethat.
That's part of the problem.
Yeah, and and and and.
Not acknowledging, I mean, andboth 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 ofthe legislature and we had
Republican co-chairs, and theyspent it.
They spent it on a capitalbudget, but but they spent it
(34:29):
and and it's, and we, so we'vecreated expectations, we've
created constituencies, we'vecreated a sense of hey, they got
theirs, where's mine?
We just, we do all sorts of badthings to ourselves when we,
when we run, when we run thisroller coaster, when we run our
(34:50):
state fiscal policy, on thisroller coaster of
forward-looking oil prices andspending every cent we have and
creating expectations.
We're going to continue to beable to spend those cents when
we hit the downside.
Speaker 2 (35:07):
Well, it's like I said, one of the things that we
need to change is the way webudget.
I mean, that was one of thenumber four in the Charter of
Changes is, you know, we need tostart looking at an average.
Instead of predicting what'sgoing to happen next year, we
need to look back and say whathave we got in the last five or
six years, the last 10 years?
What is our average?
Ok, then, that's what we'regoing to budget on, or we should
go from there, but we need agovernor that has the form to
(35:31):
actually do that right.
I mean, that's the problem.
I mean we're laughing, butthat's the problem.
Speaker 1 (35:37):
Oh yeah, dunleavy's just been such a from a fiscal
standpoint.
Dunleavy's just been such adisappointment.
I mean, this year's budget,this year's budget is a classic
in terms of in terms of hisproposed, but his proposed
budget was a classic in terms ofshowing how bad it can be.
You know, the 10 year forecastshowed, yeah, we have enough
(35:58):
revenue and enough savings toget us through a couple of years
.
And then it's just one big redline from uh, from there on out,
and as governor, I'm just goingto throw it out there.
That way, I'm not going to, I'mnot going to try to propose any
solutions to it.
That's just.
That's just.
That's just the way I'm goingto.
I'm going to ride here andthat's.
You know, what did we elect theguy to do?
(36:18):
We didn't elect the guy to dothat.
We elected him to actually comeup with proposed solutions.
Speaker 2 (36:28):
Yeah, no, it's definitely for us, and, in all
honesty, of doing this for 25years, all I could say is it's
been the most frustrating thing,because this has been the one
thing that I have been pointingto for 25 years that you can't
continue to spend more than youtake in and expect it's going to
work out.
Okay, math doesn't work thatway, right?
We can't work with negativeintegers on a math, on a on a
(36:51):
budget basis and unfortunately,you know they all just oh, it's
fine, why are you so, why areyou so down?
Why are you so negative?
But you know, oh, it'll begreat, it'll be fine.
And yet here we are, like yousaid, the big red line.
That's why we all wore the redshirts today.
The big red line, right?
Speaker 1 (37:10):
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 gonnabe bailed out again.
Look at those prices, you knowspike and uh, and sort of forget
that that they come back downand that OPEC is on a drive to
take control of the market againat a lower price point.
(37:32):
It's just.
It is frustrating to be on thisroller coaster, which is what
we've been on.
Speaker 2 (37:39):
We're continuing now.
Brad Keithley, alaskans forSustainable Budgets, the weekly
top three.
We're saved, brad.
We're saved, we're going tobuild an AKLNG.
You heard him say it.
The president said we're goingto do it, we're saved.
Of course you and I, who'vebeen following this issue you
for a lot more than I have, buthave been following this issue
know that this is again one ofthose pie crust promises easily
(38:02):
made, easily broken right.
And yet we continue to hearabout all these deals.
Now Japan may have gone maybe alittle more solid on the record
, I don't know.
Tell us about this decisionfrom Jera and who Jera is, and
give us the rundown here.
Speaker 1 (38:19):
So Jera is the biggest Japanese LNG purchaser.
There are a number of JapaneseLNG purchasers.
Jera is the one that purchases,sort of a consortium that
purchases for the electricutilities in Japan and is the
biggest purchaser of JapaneseLNG or imports of LNG into Japan
(38:43):
.
A couple of weeks ago, or maybelast week, last week, we talked
about, you know, the thing thatsurprised me the most, or the
thing that happened, the thingthat was most important about
the Governor's SustainabilityConference Energy Sustainability
Conference was the thing thatdidn't happen.
And the thing that didn'thappen was this big signing
(39:06):
party that that I think peoplehad looked toward.
Uh, when you had, uh, themembers of the Trump
administration up here, um, Ithink there was a hope and
expect, and, by some, anexpectation, that there was
going to be a big signing partywhere the Japanese, koreans and
Taiwanese came in and signed,you know, binding letters of
(39:28):
intent, or maybe even notbinding letters of intent, but
at least letters of intent.
At the sustainability conferencearound LNG there had been a lot
of discussion about, you know,there was going to be a summit,
an LNG summit, in Alaska in theearly weeks of June, timed with
the Governor's SustainabilityConference.
(39:48):
We were going to have membersof the administration up here,
of the Trump administration uphere to represent the
administration.
We were going to haverepresentatives of Japan and
Korea and others up here.
We were going to have a bigsigning party, and I think that
what we talked about last weekwas the biggest news out of the
Sustainability Conference wasthe thing that didn't happen,
(40:09):
which is that we didn't havethat signing party.
Well, I didn't know at the time, but turns out there was going
to be a signing party but itdidn't involve AKLNG.
This past week there was anannouncement by Jera and others
(40:54):
and a big signing party that theSecretary of Interior and the
Japanese purchaser making a bigshift, announcing a big shift in
supply sources from Australiato the US and in a significant
commitment by Jera to USsupplies as it, to use its terms
, rebalanced its supply fromAustralian focused to more US
focused.
Big signing party down inHouston, attended by a number of
people, with Jera signing fouragreements, four LNG supply
(41:17):
agreements with four suppliers,all of which are located in the
US Gulf Coast.
No Alaska at all.
Not even a piece of it, noteven a piece of the four
agreements, is Alaska-oriented.
And so I think you know,coupled with the non-event at
(41:42):
the at the sustainabilityconference, coupled, coupling
that with the event thatoccurred with the signing party,
uh, down in Houston involvingJera, I think.
I think we've got to see thewriting on the wall about, about
the Alaska LNG project If youcan't, if you, I mean what?
(42:02):
How Jera pitched this was look,we are realigning or rebalancing
our supply portfolio fromAustralia-focused to an
increased US focus.
We are signing agreements,significant agreements for
offtake agreements with USsuppliers, these four US
(42:23):
suppliers, for offtakeagreements with these, with with
us suppliers, these four ussuppliers.
We are, we are focusing on theU S, we are improving our trade
relations with the U S.
We have the secretary ofinterior and the secretary of
energy down at down at thesigning party talked about,
talking about how important itis and how great it is to have
this, to have this us focus, andand for Alaska not even to have
(42:43):
a piece of that um is, um, is,is is very telling.
Um, if you can't, if you can't,when Jarrah is rebalancing,
intentionally rebalancing fromAustralia to the U S and it's
signing agreements to toimplement that rebalancing, if
(43:03):
Alaska and and Jera is thelargest LNG purchaser, uh, uh,
japanese LNG purchaser if you,if Alaska can't even get a piece
of that, can't even get a pieceof the market for the largest
LNG, for the largest JapaneseLNG purchaser, um, I don't know,
I really don't know what, whathope there is for, uh, for
(43:25):
saying that that you're going tobe able to bring, bring this
project together.
So I, that the signing partydown in houston hasn't, uh, uh,
hasn't gotten a lot of press uphere or any press up here, but
by gosh, you know, when I sawthat, the headlines of it, I, uh
, that that is it.
That is probably moresignificant news for Alaska LNG
(43:50):
than any piece of news.
Including the fact that GlennFarn had entered into contracts
is probably the most significantnews for Alaska LNG in the past
six months, certainly, andpossibly the past year, and it's
not the news you would want itto be no, I mean because,
logistically, again, it's astraight shot from alaska.
Speaker 2 (44:10):
All this other stuff is coming from the gulf coast of
texas, which means it has tocome through the canal or around
the horn or wherever they'rebringing it, and so you would
think it would.
Oh, it's a straight shot fromalaska.
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 ofagreements, so they were the one
.
Speaker 1 (44:27):
No, there's two up, two of them that are binding,
two of them where they'rebinding.
Speaker 2 (44:30):
So, uh, and we're talking about, I mean, this is
like five million tons per year.
I mean this is, this is asignificant amount.
Even if they had just said, oh,we'll break off a million tons
for a year for Alaska, I mean itwould have been something.
But I think everybody's lookingat this and going, no, not
going to happen.
That's how I read it at thispoint.
Speaker 1 (44:53):
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 toAlaska.
The US goes from 10% up to 30%as a result of these agreements,
and Jira wants to.
(45:13):
I mean they're making the pointthat we want to rebalance
because we want supply diversityand you've also got.
I mean.
So they're keeping Australia asa part of it, they've got the
Middle East as a part of it, abig part of it, and now they're
saying we've got the US as a bigpart of it.
So at some point I mean Jared'sgoing to say look, we've filled
(45:35):
the US quota, we've filled inthis portfolio of diversity,
we've filled what we want out ofthe U S with with these
agreements.
We've rebalanced to get what wewant out of the U S in these
agreements.
There isn't any.
There isn't anything left oranything significant left in
their, in their demand.
(45:55):
And if you don't, if you're notI mean if this is the largest
LNG purchaser in Japan and theydon't have anything left for
Alaska, how the heck are youever going to bring this on?
So it is major news.
It is just like the biggestnews out of the sustainability
conference was, you know, theevent that didn't happen.
The biggest event for Alaska,lng is the event that did happen
(46:18):
.
That nobody's talking about inAlaska because it didn't happen
up here, it happened down inAlaska.
Speaker 2 (46:22):
Right Didn't happen up here.
Because it didn't happen uphere, it happened out.
Right Didn't happen up here andit didn't mention us and
nobody's inferring the, the, the.
The context of that, and that'spart of the problem here, is
that we've got to.
You know this.
This does not paint a rosypicture of the AK LNG project.
When it's all said and done, asmuch as people, as much as
people want and dream and I meanI was on the LNG bandwagon for
(46:45):
many years until I reallystarted getting into it and and
looking at again the economicsand the different reports and
talking with you over the yearsand 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, baseit on the worst-case scenario,
and the worst-case scenario isit's not going to come through.
Speaker 1 (47:10):
That's not only the worst-case scenario, it's also
the most realistic.
Right, the most realisticscenario, yeah, exactly, and you
know, every once in a while yousort of spike and say, okay, we
are the closest, we are theclosest 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 itwould be, you know it, you would
have a savings in terms of time, you would have a savings in
(47:30):
terms of of of money, you wouldhave a savings, or you would
have benefits in terms ofsecurity, because you wouldn't
have to either go through thecanal or or or go around the
horn, and so, yeah, we do havean advantage there.
But to have that in successiveweeks, to have that not
acknowledged, basically by theabsence of a signing party
(47:53):
during the Alaska SustainabilityConference, and then, sort of
right in your face the followingweek, have Jura go down and
sign four agreements, fouragreements, four agreements.
Four agreements Couldn't evenbreak off, one for Alaska.
Four agreements with Gulf Coast, us Gulf Coast producers.
(48:17):
Even the most optimistic, eventhe most rah-rah cheerleading
AKLNG person out there has gotto say wait a second.
Maybe this closeness issueisn't all it's cracked up to be,
maybe that's not going to bethe thing that saves us.
Brad, 60 seconds here Finalthoughts.
(48:39):
Well, Michael, oil prices are up, but oil prices are going to
come back down.
Alaska LNG isn't going to saveus.
We've got to talk about fiscalpolicy as part of the education
task force.
We've got to put this all inthe proper context of we can
only spend what we haveno-transcript and at ak4sbcom,
(49:28):
Go argue with him on Twitter.
Speaker 2 (49:29):
He loves that.
He needs more of that in hislife, Brad.
Speaker 1 (49:32):
Thank you so much Michael as always, thanks for
having me.
Well, that's a wrap for anotherweek's edition of the Weekly
Top Three from Alaskans forSustainable Budgets.
Thank you again for joining us.
Remember that you can find pastepisodes on our YouTube,
SoundCloud, Spotify and Substackpages, and keep track of us
during the week on Facebook andTwitter.
(49:53):
This has been Brad Keithley,Managing Director of Alaskans
for Sustainable Budgets.
We look forward to you joiningus again next week on the Weekly
Top Three.
Hi, this is Brad Keithley, managing Director of
Alaskans for Sustainable Budgets.
Welcome to the weekly top threethe top three things on our
mind here at Alaskans forSustainable Budgets for the week
of June 16th 2025.
The weekly top three is aregular segment on the Michael
Duke Show for SustainableBudgets for the week of June 16,
2025.
The weekly top three is aregular segment on the Michael
(00:31):
Duke Show.
The show broadcasts on bothFacebook Live and YouTube Live,
as well as via streaming audiofrom the show's website weekdays
from 6 to 8 am.
I join Michael weekly in thefirst hour of Tuesday's show
from 6.10 to 7 am for adiscussion between the two of us
about our three issues.
We post the podcast of ourdiscussion following the show on
(00:51):
the Alaskans for SustainableBudgets Facebook, youtube,
soundcloud, spotify and Substackpages.
Also on the Alaskans forSustainable Budgets website, as
well as the projects page onnational blog site mediumcom.
You can find past episodes ofthe weekly top three also at the
same locations.
(01:11):
Keep in mind that, in additionto these podcasts during the
week, you can also follow andparticipate in the discussion
with us of these and otherissues affecting Alaska's fiscal
and economic conditions byfollowing us on the Alaskans for
Sustainable Budgets Facebookpage and through our posts on
Twitter.
(01:32):
This week, our top three issuesare these First, we discuss
where oil prices are likelyheaded and how Alaska could
reduce the fiscal rollercoasterour current budgetary approach
creates.
Second, we discuss one issuethat we believe should be at the
heart of the coming educationtask force and its subsequent
(01:54):
recommendations.
And third, we examine what arecent decision by JIRA Japan's
largest LNG importer, japan'slargest LNG importer means for
Alaska LNG.
And now let's join Michael.
Speaker 2 (02:09):
All right.
Well, let's tackle this.
Oil prices.
You know, we know, that nextyear there's a predicted $1.5
billion budget, and that wasbased off some higher oils.
And then oil started to tankand it looked like it was going
to slide down into the 50s.
And then, of course, israel andIran got into the little thing,
and so now it's man, I feellike I'm on a roller coaster.
(02:30):
This is like an e-ticket rideat Disneyland.
What, what is you know whereoil price is going?
What does it mean for us?
Speaker 1 (02:38):
Now, this is the segment that I'm absolutely
going to get wrong, because, youknow, predicting oil prices is
is a fool's errand.
Um, and I'm not really tryingto predict the precise price,
that would truly be a fool'serrand, but I think I think it's
useful to talk about somefundamentals, uh that that we
(02:59):
see in the oil markets, thatthat are useful to remind
ourselves of when these rollercoasters get going.
And the fundamentals are thefundamental is prices set by
supply and demand.
We always have to keep that inmind, that we can have all these
(03:20):
things going on in the world.
We can have all of the bombsgoing off or we can have all of
the tariffs that are out on inthe world.
We can have all of the, all ofthe you know bombs going off or
we can have all of the you knowtariffs that are out there in
the world.
That was, that was the storylast week, before this started
uh, going out that going on outthere.
But it's fundamental supply anddemand and the and the and the
fundamental supply side of thisis that Saudi has increased
(03:47):
production over the last fewmonths.
They've increased, they'veraised the OPEC ceiling over the
last few months.
Additional supply has come ontothe market and that additional
supply has softened pricebecause demand hasn't moved much
.
That additional supply hassoftened price in a way that got
(04:10):
us down into the 60s.
What's going on with Israel-Iranis what always goes on when you
have something like this in theMiddle East it's concern about
supply.
Supply Is there going to besome activity that disrupts
supply in a way that sends usback to 1973, the Saudi oil
(04:32):
embargo, or 1979, the Iranrevolution?
That seriously disrupts supplyin a forces price up, and what I
think we're seeing is that, forall of the attacks that are
going on, for all of the damagethat's going on, supply really
(04:56):
isn't being impacted.
Israel seems to have gone outof its way not to attack Iran's
export capabilities.
They've attacked energy insideIran, but it's domestic energy,
it's internal energy focused,that Israel has attacked.
They've not attacked Iran'sexport pipelines or Iran's
(05:19):
export terminals, and Iran, forall of the bluster and all of
the things that it says, has notdisrupted 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
(05:43):
think we're seeing is themarket going okay.
There's risk here and we'recontinuing to assess the risk
that this will, that this willramp up in some way, but I think
the market is is sort of beingcapped off by the realization
that that there's not, thatthere's not been supply
(06:06):
disruptions to this point.
There was an FT articleFinancial Times article that I
think was very insightful onthis point, and it has a
paragraph that I think is usefulto read and keep in mind.
The interplay of geopoliticaluncertainty, oil prices and
macroeconomics is rarelystraightforward, as some useful
research from the EuropeanCentral Bank published in 2023
(06:29):
indicates.
It points out that Brent crudeprices leapt by 5% in the
immediate aftermath of 9-11 asinvestors priced in the chance
of war in the Middle Eastdisrupting supplies, but they
were down 25%.
But oil prices were down 25%within 14 days of 9-11, as fears
that a slowing global economywould weaken oil demand came to
(06:52):
the fore In the two weeksfollowing Russia's invasion of
Ukraine in February 2022, rentprices rose by 30%, but they
were back at their pre-invasionlevel eight weeks later.
So I think the lesson we takefrom this, or the lesson that
the market takes from this, iswhen there's an event that is,
(07:15):
in a major supply region or in amajor demand region.
When there is an event thatcould theoretically put supplier
demand at risk, the market'sgoing to react and it's going to
jump, and it's going to jumpeither one way or the other in
response to that event, to use aprobably inappropriate metaphor
(07:42):
.
But as the smoke clears and andyou begin to see whether there
is actual damage to supply ordamage to demand, um, the market
sort of sort of readjusts andwe're we're seeing that.
We're seeing that to somedegree in the markets.
I pulled up the markets thismorning and the December uh 25
(08:04):
or the, the midpoint uh 2020,the midpoint fiscal year 26,.
Which is the way we think aboutit in Alaska.
The midpoint fiscal year 26 oilprice right now, as of this
moment, futures price is $71.
The midpoint FY27, the yearafter that is $68.
So I think you see the marketsort of still hiked up as a
(08:31):
result of these concerns aboutwhether there's going to be a
disruption to supply, but notoverly spiked, not convinced
there's going to be a long-termdisruption to supply.
Spiked, not convinced there'sgoing to be a long-term
disruption to supply.
And I think you've also seen itsort of coming off the highs
(08:53):
that spiked to shortly after thebeginning of the Iraq-Israeli
or the Israeli attack on Iraq.
So we're in for a continuedroller coaster.
Yesterday, the big news was thatthere were ships on fire in the
Arabian Gulf and all of asudden, you know, oh my God,
there's been an attack.
We're going to start seeingthese attacks on shipping in the
(09:14):
Gulf and, as a consequence,there's going to be disruption
of supply.
Well, as the day wore on, itturned out that what had
happened is two ships hadcollided.
There wasn't an attack Right,and while the collision may have
been a result of navigationaldisruption due to the war, it
(09:36):
didn't look like it waspersisting.
That navigational disruptionwas going to persist in a way
that was going to put shippinggenerally at risk.
So you're going to see thesespikes during a day, or maybe
even during a week, butlong-term it's supply and demand
(09:56):
and long-term, opec hasincreased supply, which is what
led to the softening of priceinto the 60s and some people
talking about going into the 50s.
Opec has increased supply.
They haven't backed off that asa result of this, and so I
think you're going to see ifthere's no additional activity
(10:16):
as a result of the war thatresults in damage to supply.
I think you're going to seeprices continue to soften back
to the level, toward the levelsthat we were at before the war
started, as time goes on, whatdoes this mean for Alaska, I
mean?
Speaker 2 (10:34):
and when you say, see the prices soften again?
Trump's vision and goal was oilin 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 orsomething like that, so we
weren't quite there yet.
But what does it mean forAlaska?
Speaker 1 (10:52):
I think it means that unfortunately that the spring,
unfortunately from a revenuestandpoint, unfortunately from a
budgetary standpoint I'm alwaysreminded by friends that it
means different things on thegasoline side but unfortunately
from the budgetary side, I thinkwe're going to see prices come
(11:14):
back down into the 60s unlessthere's some serious supply
disruption, long-term supplydisruption that starts occurring
as a result of the war.
I think we're going to seeprices start to come back down
where they were before, whichsort of reflected the supply
demand, the pre-war supplydemand balance.
And if there's no, if the waris not resulting in a
(11:34):
significant supply disruption, Ithink we're going to see it
come back down into that rangethat it was, which is in the
sixties, and the market is goingto sit there waiting for OPEC
to see if OPEC continues toraise the levels.
What is going on with OPEC is,during COVID, opec brought its
(11:56):
caps down significantly,restricted supply significantly
in an effort to, as COVID,destroyed demand, in an effort
to balance supply demand at aprice point that was in the 70s,
and so OPEC brought the capsdown.
What we've been seeing over thelast few months is OPEC bringing
(12:16):
the caps back up, essentiallyto pre-COVID levels, and they
aren't finished doing that yet.
They've sort of brought it uppart of the way, but they
haven't finished doing that.
So I think what of brought itup part of the way, but they
haven't finished doing that.
So I think what we'll see isprices come back down.
If there's no long-term supplydisruption coming out of the war
, I think we'll see prices comeback into the 60s, sort of
(12:36):
settle back into the 60s, andthey'll sort of sit there
waiting on what OPEC's going todo next in terms of continuing
to lift the caps back topre-COVID levels.
So the short answer is I thinkwe're going to continue to see
budget softness in Alaska.
Speaker 2 (12:54):
So no quick fix to our budget woes for next year
with that deficit, because we'llprobably be back here within a
few weeks if this conflictdoesn't escalate or attack any
of the supply lines or anythingelse.
So, all right, interestingstuff.
Brad Keithley, alaskans forSustainable Budgets.
This was actually one of thethings that I was wondering
(13:16):
about as this attack came out.
I was thinking, huh, what doesthis do to oil prices?
That sounds a little cruel, butI'm just like huh, what is this
due to oil prices?
I mean, that sounds a littlecruel, but I'm just like huh,
what is this due to oil pricesin Alaska?
Speaker 1 (13:29):
That's how Alaskans think, isn't it, Ooh war?
Speaker 2 (13:31):
Yeah, ooh, I was just wondering I mean, you know,
worried about World War IIIMaybe, but yeah, it was really
what was going on with our oilprices.
I thought that was a greatexplanation because I've been
wondering about this and youknow, I know that things are
cyclical and I know that after Iknow that after the Russia
attack, that oil pricesstabilized, you know, in a
(13:53):
fairly short period of time.
But I thought that was that'san interesting take on how all
that go, how all that is goingto lay out again.
This is just another one ofthose things where there was,
you know, maybe there was ahopeful sigh of relief in Juneau
and then they realized thatmaybe it's not going to save all
that they're going to do.
We're going to have to dosomething about this?
Speaker 1 (14:13):
Yeah, it really it was.
It added some a lot ofconfusion to the governor's veto
of, or the line item veto of,education on K through 12
spending, citing the state'sfiscal outlook depressed fiscal
outlook or lower fiscal outlookand then coming out with the
(14:40):
revised revenue forecast thatdropped prices down even further
than they had been in thespring revenue forecast.
And the next day or maybe itwas later that same day israel,
iran starts um, and prices spikeand and, and so you have all
those you have a lot of commentsout there of of you know
keyboard warriors that say, ohmy god, you know governor vetoes
, but now prices are way up intothe 70s and you know we have
(15:01):
all this extra revenue over whatthe spring forecast.
How could he have done that?
Uh, well, of course he didn'tknow.
Speaker 2 (15:07):
it's time yeah, like netanyahu called don levy and
said by the way, your oil pricesare going to spike, so don't
veto anything because we'reabout to strike iran.
Speaker 1 (15:15):
I mean, you know, come on, it's ridiculous but but
even if you'd known that, evenif you'd done that, you looking
at, I mean, you've got tounderstand supply disruptions
and you've got to focus onsupply disruptions.
And I will say that Israel andIran Israel in its precision of
targeting and Iran in itsresponse have sort of gone out
(15:40):
of their way not to hit supplyissues.
I mean, israel has hit internaldomestic supply sources, energy
supply sources for Iran, both onthe gas side and the electric
side, certainly, and somewhat onthe oil side, but Israel's gone
out of its way not to attackthe export facilities and Iran's
(16:02):
still continuing to export andships are picking it up and
taking it out and it just keeps,keeps on going.
So as long as that happens, uhas, 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 thathappens and the market sort of
sorts out, well, maybe, maybe wearen't going to have, you know,
supply disruptions here.
(16:23):
You'll, you'll see the thathappens and the market sort of
sorts out well, maybe we aren'tgoing to have supply disruptions
here You'll see the marketrespond in a fairly short period
of time.
It doesn't take the market longto absorb that information and
then to incorporate it intoprices.
Speaker 2 (16:39):
Well, again, like I said, I hear something like this
and all I remember is that oldbumper sticker that said you
know God, please grant usanother pipeline.
We promise not to piss this oneaway.
It's like we're constantlywaiting to be saved by some kind
of world event that changeseverything instead of changing
our own behavior.
Speaker 1 (16:59):
That's the key here, yeah, here, yeah.
And the other thing, michael, Imean I'm reminded of a
discussion we had last week orthe week before we put our.
We Alaskans put ourselves inthis position by predicating our
budget on, on, on the thefutures market of the moment.
Right, um, you know, we, wepredicate spending, we predicate
(17:20):
revenue and then spending onwhatever the futures market is
telling us.
And, as I, as we've talkedabout on the show before, what
we should be doing ispredicating revenues on historic
, on an average of historicprices, just like we do on the
PFD and just like we do on thePOMV draw.
We ought to be looking at whatwe've had in the past.
Speaker 2 (17:41):
Welcome back to the program.
The Michael Luke Show continues.
It is Tuesday, which means it'sTruth Tuesdays, the weekly top
three from Brad Keithley, fromAlaskans for Sustainable Budgets
.
We continue on with ourdiscussions.
Number two Brad says he's notgoing to hold his breath on the
conclusions from the EducationTask Force.
(18:02):
I mean gasp.
I'm shocked when you look atthe makeup of the task force.
What are they going to discover?
Brad, give us your thoughtshere.
Speaker 1 (18:11):
So one of the pieces of the education bill that
passed over the governor's veto.
I mean we've got a lot ofvetoes going on here.
We've got a lot of bills goingon, but we'll recall that there
was an education bill that setthe $700 BSA increase that the
governor then line item vetoedin the budget.
But the fundamental House billthat set that passed then was
(18:36):
vetoed by the governor, thenpassed over veto and enacted
over the veto and so that billstill sits out there as the law
and one of the provisions ofthat that we mostly talked about
the increase in the BSA in thatbill.
One of the provisions of thatset up a task force, an
education places where you knowsort of the, in some ways, the
(19:13):
fundamental truths of theeducation system.
Does it need more funding?
Where does it need more funding?
Does it need reform, policyreform when does it need policy
reform?
Now the task force has acredibility issue right off the
get-go because of the members.
You've got some verypro-education members that are
(19:34):
in the majority on the taskforce and limited minority
membership.
There's six members.
Four come from the majority,two from the majority in the
majority, two from the majorityin the Senate, two from the
majority in the House, as youwould expect, the House
Education Chairman of bothbodies are on the task force and
(19:55):
very pro-education members fromother committees are on the
task force for the majority.
It's Mike Kronk, uh, on fromthe Senate, from the minority,
and, uh, jason Ruffridge, on the, on from the from the house.
So you can sort of guess wherewhere the conclusions are going
(20:16):
to be, and so there's acredibility issue with the, with
the task force, right off thebeginning.
But here's, here's somethingthat I think the task force
actually could raise awarenesson and include in its
conclusions, and, oddly enough,the idea for that came from an
(20:36):
opinion piece by a couple ofmembers of the Well, the
chairman and a member of each ofthe Anchorage and Fairbanks
(20:58):
school boards, who wrote anopinion piece that appeared in
the ADN and the Dunleavy'seducation veto shows a
leadership crisis and Alaska'surgent need for a fiscal plan,
and it's the last part of thatAlaska's urgent need for a
fiscal plan that I think isimportant.
(21:19):
Actually, the editorial thatthey wrote doesn't go on to
describe what they really meanby that.
It gets mentioned again only inthe last paragraph of the op-ed
, but it triggered in my mind,something that the Education
Task Force can do and that isframe the education issue as a
(21:42):
sub-issue of the overall fiscalissue the state is facing.
I don't think you're ever goingto get resolution on the K-12
issue.
I don't think you're ever goingto get resolution on any issue
that involves any long-termresolution on any issue that
involves the budget involvesspending, until you have a
(22:04):
fiscal plan in place.
As long as we're floating along, dependent on what the futures
market says about oil, dependentupon what the permanent fund
corporation investment policy iswith respect to the permanent
fund, as long as you're floatingalong with sort of a very
(22:25):
unstable fiscal plan, I thinkyou're always going to have
unstable policy and unstablespending on the other side of
the ledger.
Those that depend upon therevenue side for spending to
fund spending are always goingto have uncertainty as long as
(22:46):
there's uncertainty on the onthe revenue side.
So I think I think it would bevery helpful in I guess I'm
really appealing to to Cronk andRuffridge to make this point
during the uh, during thedeliberations of the body.
I think it would be very helpfulif the education task force
said look, one of thefundamentals that we've got to
(23:08):
resolve before you can resolveeducation is to resolve the
state's fiscal situation.
One way or another.
You've got to lay down a solidbase on the fiscal side, on the
revenue side, before we reallywill get resolution to what's
going on over on the spendingside K through 12 or any other
(23:30):
category of spending you want toaddress.
We've got to get a stable baseresult on the revenue side and
I'm not arguing for increasingrevenues or lowering revenues or
any of that.
You've got to get a solid baseon the revenue side and I think
(23:52):
part of that is you've got to golook at oil taxes.
I think oil taxes are below theconstitutional requirement of
maximum contribution and I thinkyou've got to go look at oil
taxes.
I think you've got to go lookat what the permanent fund
corporation is doing in terms ofits investment policy.
(24:12):
I think we're leaving 500, 700million, maybe a billion dollars
on the table annual revenue interms of revenue from the, from
the investment policies that the, that the permanent fund
corporation is pursuing.
I'm not suggesting that we havethe education task force
undertake to write a new oil taxcode or to redirect the
(24:40):
permanent fund corporation in away that improves its investment
policy.
That improves its investmentpolicy.
But I am saying that I think itwould be highly useful for the
Education Task Force to say thatone of the foundations of
getting K-12 or any spendingpolicy right is getting a very
stable fiscal revenue side inplace, and I think that would be
(25:06):
, I think that would be ofservice coming from this task
force.
Now, do I think they'll do it?
Uh, do I think the task forcewill?
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 andRuffridge are, are, are there to
contribute anything, I think itought to be that sort of
(25:30):
fundamental concept that we'vegot to get a fiscal plan, a
solid fiscal plan, in placebefore we really can address any
of these issues on the spendingside that people want to
address side that people want toaddress.
Speaker 2 (25:48):
No, and I think that this has been the problem.
Again, this is the foundationof any home or pyramid or
structure or whatever needs tobe strong.
And that's the problem is thatour financial foundation is all
over the place.
We have no long-term plan, orevery outlook is only till next
year, maybe the year after, ifit's forward looking at all.
There is no 10 year.
(26:09):
There is no 10 year plan, thereis no long term, you know, on
any of this stuff.
And so, yeah, is it surprisingthat we run around like our
hair's on fire every everysession, to some new crisis?
No, because they can't decide.
And again, this all goes backin my mind to you know, we have
(26:29):
a serious spending problem.
Now, can we cut our way to thesolution?
Probably not logistically.
It would have to be some kindof step-down approach.
But you know, the bottom lineis, until we acknowledge that,
we're not going to fix it.
Whether we replace it with newrevenues or whether we cut to it
, until we even acknowledge it,it's not going to happen.
Speaker 1 (26:53):
Yeah, and certainly we would get pushback from other
members of the EducationCommittee Task Force on that
issue.
They would say, no, we have arevenue problem.
My point here is what Alaskahas done through through various
steps focusing on the, on thefutures market being one of them
(27:14):
, the oil futures market beingone of them is we have a very
rollercoaster, a very unsolid, avery unstable fiscal base and
and as a consequence of that andas we discussed in the show a
few weeks ago, as a consequenceof that, when you have these
spikes in revenue, you getspikes in spending, you get new
(27:38):
programs, you get new capitalprojects underway, you create
new expectations, you create newconstituencies that sort of
don't go away.
When, when we, when we, go downthe other side of the roller
coaster and revenue sort ofmelts away, you've still got all
of these programs, you stillhave got all this expectations
of capital spending.
(27:58):
You've still got all of these,all of these constituencies that
are still out there, that gotbuilt up during the peak periods
, um and um and and you know,and they continue pressing even
though revenue is melting away.
I sort of regardless of and it'shard to say this because I know
people come with their ownpreconceived notions about what
(28:20):
the solution is.
But sort of, regardless ofwhether it's a spending problem
or a revenue problem, we justneed to have a solid base, a
solid base of revenue and have abase that doesn't go on this
roller coaster when oil futuresprices or oil prices do what
they do.
Structure that takes any excessrevenue over the base and puts
(28:54):
it into some sort ofstabilization fund to have it
there to balance things out whencurrent revenues go away
because oil prices go down.
Until we have that sort ofsolid base and see what that
baseline is and then buildspending off that baseline.
Until we have that, we're goingto continue to have this debate
and we're going to continue tohave.
(29:16):
You know, people say, oh, weneed more spending, or we need
less spending, or we need thisor we need that.
We need to be more like anormal state in the sense of
having a baseline, of a regular,predictable, solid baseline of
revenue and start from there andthen see what spending fits
(29:40):
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 havethat sort of solid base.
One of the one of thefundamentals of being able to
figure out what to do on thespending side whether we have
(30:01):
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 anexpectation of a solid base on
the revenue side.
Speaker 2 (30:14):
Well, we know how much they pay attention to task
force, right?
I mean the fiscal policyworking group task.
I mean they did a lot of work,spent a whole summer that they
can't get back and yet theypretty much ignored everything
that came out of that.
So maybe we can just ignorewhatever comes out of this group
.
I don't, I don't know it's.
It would be nice to see anactual you know commentary that
(30:36):
says, hey, we need to have afiscal plan and have somebody
actually follow up with it.
That's been part of.
The problem is that you knowit's just, it's never been
followed up on Afterwards.
We've probably gone through adozen of these different you
know working groups or taskforces or special committees or
whatever, and they just neverfollow through on it.
(30:56):
Why?
Because it's easier to do whatyou'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, onthis.
Speaker 1 (31:10):
Well, we do have the Fiscal Policy Working Group.
Jesse Keel is on that.
Jesse Keel is on this taskforce.
A hope would be that he wouldbring the learning from the
Fiscal Policy Working Group overto the task force and talk
about the need for that solidbaseline.
Whether Jesse's going to dothat is probably not in the art
(31:31):
of the possible, but I do thinkCronk and Ruffridge can.
I think that's what they can be, if they can be additive about
anything.
They can be additive abouttalking about needing to have a
solid fiscal base before wereally can have a solid
discussion about educationpolicy or anything else.
Speaker 2 (31:50):
Well, you'll be happy to know, brad, that Mike Kronk
is in the chat room and sayingBrad, that is exactly what I
told every single superintendentthat came into my office and
asked us to help or if theycould help.
I told them to help usimplement a fiscal plan.
I mean, I hope it happens.
I, you know, again cautiouslyoptimistic that maybe something
(32:12):
will come out of this.
But again, two members of theminority versus the rest of them
and, looking at the rest of themakeup, they're all very much
pro spend, spend, spend.
I don't know.
I don't know how muchhorsepower they're going to have
in that room when it's all saidand done.
Speaker 1 (32:26):
Well, senators, start every meeting, end every
meeting with that statement andat some point, it will be enough
that people can't ignore youabout it.
I do think that it could bevery helpful to continue to
remind this task force, or anytask force, of the need for a
(32:46):
solid, solid, predictablebaseline that doesn't get spiked
when oil prices go up.
There's a way of taking thatexcess money and putting it into
a stabilization fund, asopposed to creating more
constituencies by spending it.
I think there's a lot ofhelpfulness that can be used by
(33:09):
reminding this task force andothers that we need that as a
baseline before we really canhave useful discussions on
spending policy.
Speaker 2 (33:18):
Yeah, I mean, that's the thing I mean.
Like I was trying to sayearlier, until we acknowledge
that there's a problem, we'rejust going to keep doing.
What we're doing and that'swhat 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 billionunderwater, no big deal.
(33:38):
We'll just take it out of oursavings account and it'll be
fine next year, and then itwasn't fine the next year and it
wasn't fine the next year.
And every year it was $3billion, $4 billion that they
draw from CBR until there was nomore money, and then then they
just again it's.
It's a classic game ofavoidance of dealing with the
issue that you're spending moremoney than you are taking in.
(33:59):
Period, full stop, end ofsentence.
And they just they don't wantto even acknowledge that.
Speaker 1 (34:05):
That's part of the problem and they just, they
don't want to even acknowledgethat.
That's part of the problem.
Yeah, and and and and.
Not acknowledging, I mean, andboth 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 ofthe legislature and we had
Republican co-chairs, and theyspent it.
They spent it on a capitalbudget, but but they spent it
(34:29):
and and it's, and we, so we'vecreated expectations, we've
created constituencies, we'vecreated a sense of hey, they got
theirs, where's mine?
We just, we do all sorts of badthings to ourselves when we,
when we run, when we run thisroller coaster, when we run our
(34:50):
state fiscal policy, on thisroller coaster of
forward-looking oil prices andspending every cent we have and
creating expectations.
We're going to continue to beable to spend those cents when
we hit the downside.
Speaker 2 (35:07):
Well, it's like I said, one of the things that we
need to change is the way webudget.
I mean, that was one of thenumber four in the Charter of
Changes is, you know, we need tostart looking at an average.
Instead of predicting what'sgoing to happen next year, we
need to look back and say whathave we got in the last five or
six years, the last 10 years?
What is our average?
Ok, then, that's what we'regoing to budget on, or we should
go from there, but we need agovernor that has the form to
(35:31):
actually do that right.
I mean, that's the problem.
I mean we're laughing, butthat's the problem.
Speaker 1 (35:37):
Oh yeah, dunleavy's just been such a from a fiscal
standpoint.
Dunleavy's just been such adisappointment.
I mean, this year's budget,this year's budget is a classic
in terms of in terms of hisproposed, but his proposed
budget was a classic in terms ofshowing how bad it can be.
You know, the 10 year forecastshowed, yeah, we have enough
(35:58):
revenue and enough savings toget us through a couple of years
.
And then it's just one big redline from uh, from there on out,
and as governor, I'm just goingto throw it out there.
That way, I'm not going to, I'mnot going to try to propose any
solutions to it.
That's just.
That's just.
That's just the way I'm goingto.
I'm going to ride here andthat's.
You know, what did we elect theguy to do?
(36:18):
We didn't elect the guy to dothat.
We elected him to actually comeup with proposed solutions.
Speaker 2 (36:28):
Yeah, no, it's definitely for us, and, in all
honesty, of doing this for 25years, all I could say is it's
been the most frustrating thing,because this has been the one
thing that I have been pointingto for 25 years that you can't
continue to spend more than youtake in and expect it's going to
work out.
Okay, math doesn't work thatway, right?
We can't work with negativeintegers on a math, on a on a
(36:51):
budget basis and unfortunately,you know they all just oh, it's
fine, why are you so, why areyou so down?
Why are you so negative?
But you know, oh, it'll begreat, it'll be fine.
And yet here we are, like yousaid, the big red line.
That's why we all wore the redshirts today.
The big red line, right?
Speaker 1 (37:10):
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 gonnabe bailed out again.
Look at those prices, you knowspike and uh, and sort of forget
that that they come back downand that OPEC is on a drive to
take control of the market againat a lower price point.
(37:32):
It's just.
It is frustrating to be on thisroller coaster, which is what
we've been on.
Speaker 2 (37:39):
We're continuing now.
Brad Keithley, alaskans forSustainable Budgets, the weekly
top three.
We're saved, brad.
We're saved, we're going tobuild an AKLNG.
You heard him say it.
The president said we're goingto do it, we're saved.
Of course you and I, who'vebeen following this issue you
for a lot more than I have, buthave been following this issue
know that this is again one ofthose pie crust promises easily
(38:02):
made, easily broken right.
And yet we continue to hearabout all these deals.
Now Japan may have gone maybe alittle more solid on the record
, I don't know.
Tell us about this decisionfrom Jera and who Jera is, and
give us the rundown here.
Speaker 1 (38:19):
So Jera is the biggest Japanese LNG purchaser.
There are a number of JapaneseLNG purchasers.
Jera is the one that purchases,sort of a consortium that
purchases for the electricutilities in Japan and is the
biggest purchaser of JapaneseLNG or imports of LNG into Japan
(38:43):
.
A couple of weeks ago, or maybelast week, last week, we talked
about, you know, the thing thatsurprised me the most, or the
thing that happened, the thingthat was most important about
the Governor's SustainabilityConference Energy Sustainability
Conference was the thing thatdidn't happen.
And the thing that didn'thappen was this big signing
(39:06):
party that that I think peoplehad looked toward.
Uh, when you had, uh, themembers of the Trump
administration up here, um, Ithink there was a hope and
expect, and, by some, anexpectation, that there was
going to be a big signing partywhere the Japanese, koreans and
Taiwanese came in and signed,you know, binding letters of
(39:28):
intent, or maybe even notbinding letters of intent, but
at least letters of intent.
At the sustainability conferencearound LNG there had been a lot
of discussion about, you know,there was going to be a summit,
an LNG summit, in Alaska in theearly weeks of June, timed with
the Governor's SustainabilityConference.
(39:48):
We were going to have membersof the administration up here,
of the Trump administration uphere to represent the
administration.
We were going to haverepresentatives of Japan and
Korea and others up here.
We were going to have a bigsigning party, and I think that
what we talked about last weekwas the biggest news out of the
Sustainability Conference wasthe thing that didn't happen,
(40:09):
which is that we didn't havethat signing party.
Well, I didn't know at the time, but turns out there was going
to be a signing party but itdidn't involve AKLNG.
This past week there was anannouncement by Jera and others
(40:54):
and a big signing party that theSecretary of Interior and the
Japanese purchaser making a bigshift, announcing a big shift in
supply sources from Australiato the US and in a significant
commitment by Jera to USsupplies as it, to use its terms
, rebalanced its supply fromAustralian focused to more US
focused.
Big signing party down inHouston, attended by a number of
people, with Jera signing fouragreements, four LNG supply
(41:17):
agreements with four suppliers,all of which are located in the
US Gulf Coast.
No Alaska at all.
Not even a piece of it, noteven a piece of the four
agreements, is Alaska-oriented.
And so I think you know,coupled with the non-event at
(41:42):
the at the sustainabilityconference, coupled, coupling
that with the event thatoccurred with the signing party,
uh, down in Houston involvingJera, I think.
I think we've got to see thewriting on the wall about, about
the Alaska LNG project If youcan't, if you, I mean what?
(42:02):
How Jera pitched this was look,we are realigning or rebalancing
our supply portfolio fromAustralia-focused to an
increased US focus.
We are signing agreements,significant agreements for
offtake agreements with USsuppliers, these four US
(42:23):
suppliers, for offtakeagreements with these, with with
us suppliers, these four ussuppliers.
We are, we are focusing on theU S, we are improving our trade
relations with the U S.
We have the secretary ofinterior and the secretary of
energy down at down at thesigning party talked about,
talking about how important itis and how great it is to have
this, to have this us focus, andand for Alaska not even to have
(42:43):
a piece of that um is, um, is,is is very telling.
Um, if you can't, if you can't,when Jarrah is rebalancing,
intentionally rebalancing fromAustralia to the U S and it's
signing agreements to toimplement that rebalancing, if
(43:03):
Alaska and and Jera is thelargest LNG purchaser, uh, uh,
japanese LNG purchaser if you,if Alaska can't even get a piece
of that, can't even get a pieceof the market for the largest
LNG, for the largest JapaneseLNG purchaser, um, I don't know,
I really don't know what, whathope there is for, uh, for
(43:25):
saying that that you're going tobe able to bring, bring this
project together.
So I, that the signing partydown in houston hasn't, uh, uh,
hasn't gotten a lot of press uphere or any press up here, but
by gosh, you know, when I sawthat, the headlines of it, I, uh
, that that is it.
That is probably moresignificant news for Alaska LNG
(43:50):
than any piece of news.
Including the fact that GlennFarn had entered into contracts
is probably the most significantnews for Alaska LNG in the past
six months, certainly, andpossibly the past year, and it's
not the news you would want itto be no, I mean because,
logistically, again, it's astraight shot from alaska.
Speaker 2 (44:10):
All this other stuff is coming from the gulf coast of
texas, which means it has tocome through the canal or around
the horn or wherever they'rebringing it, and so you would
think it would.
Oh, it's a straight shot fromalaska.
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 ofagreements, so they were the one
.
Speaker 1 (44:27):
No, there's two up, two of them that are binding,
two of them where they'rebinding.
Speaker 2 (44:30):
So, uh, and we're talking about, I mean, this is
like five million tons per year.
I mean this is, this is asignificant amount.
Even if they had just said, oh,we'll break off a million tons
for a year for Alaska, I mean itwould have been something.
But I think everybody's lookingat this and going, no, not
going to happen.
That's how I read it at thispoint.
Speaker 1 (44:53):
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 toAlaska.
The US goes from 10% up to 30%as a result of these agreements,
and Jira wants to.
(45:13):
I mean they're making the pointthat we want to rebalance
because we want supply diversityand you've also got.
I mean.
So they're keeping Australia asa part of it, they've got the
Middle East as a part of it, abig part of it, and now they're
saying we've got the US as a bigpart of it.
So at some point I mean Jared'sgoing to say look, we've filled
(45:35):
the US quota, we've filled inthis portfolio of diversity,
we've filled what we want out ofthe U S with with these
agreements.
We've rebalanced to get what wewant out of the U S in these
agreements.
There isn't any.
There isn't anything left oranything significant left in
their, in their demand.
(45:55):
And if you don't, if you're notI mean if this is the largest
LNG purchaser in Japan and theydon't have anything left for
Alaska, how the heck are youever going to bring this on?
So it is major news.
It is just like the biggestnews out of the sustainability
conference was, you know, theevent that didn't happen.
The biggest event for Alaska,lng is the event that did happen
(46:18):
.
That nobody's talking about inAlaska because it didn't happen
up here, it happened down inAlaska.
Speaker 2 (46:22):
Right Didn't happen up here.
Because it didn't happen uphere, it happened out.
Right Didn't happen up here andit didn't mention us and
nobody's inferring the, the, the.
The context of that, and that'spart of the problem here, is
that we've got to.
You know this.
This does not paint a rosypicture of the AK LNG project.
When it's all said and done, asmuch as people, as much as
people want and dream and I meanI was on the LNG bandwagon for
(46:45):
many years until I reallystarted getting into it and and
looking at again the economicsand the different reports and
talking with you over the yearsand 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, baseit on the worst-case scenario,
and the worst-case scenario isit's not going to come through.
Speaker 1 (47:10):
That's not only the worst-case scenario, it's also
the most realistic.
Right, the most realisticscenario, yeah, exactly, and you
know, every once in a while yousort of spike and say, okay, we
are the closest, we are theclosest 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 itwould be, you know it, you would
have a savings in terms of time, you would have a savings in
(47:30):
terms of of of money, you wouldhave a savings, or you would
have benefits in terms ofsecurity, because you wouldn't
have to either go through thecanal or or or go around the
horn, and so, yeah, we do havean advantage there.
But to have that in successiveweeks, to have that not
acknowledged, basically by theabsence of a signing party
(47:53):
during the Alaska SustainabilityConference, and then, sort of
right in your face the followingweek, have Jura go down and
sign four agreements, fouragreements, four agreements.
Four agreements Couldn't evenbreak off, one for Alaska.
Four agreements with Gulf Coast, us Gulf Coast producers.
(48:17):
Even the most optimistic, eventhe most rah-rah cheerleading
AKLNG person out there has gotto say wait a second.
Maybe this closeness issueisn't all it's cracked up to be,
maybe that's not going to bethe thing that saves us.
Brad, 60 seconds here Finalthoughts.
(48:39):
Well, Michael, oil prices are up, but oil prices are going to
come back down.
Alaska LNG isn't going to saveus.
We've got to talk about fiscalpolicy as part of the education
task force.
We've got to put this all inthe proper context of we can
only spend what we haveno-transcript and at ak4sbcom,
(49:28):
Go argue with him on Twitter.
Speaker 2 (49:29):
He loves that.
He needs more of that in hislife, Brad.
Speaker 1 (49:32):
Thank you so much Michael as always, thanks for
having me.
Well, that's a wrap for anotherweek's edition of the Weekly
Top Three from Alaskans forSustainable Budgets.
Thank you again for joining us.
Remember that you can find pastepisodes on our YouTube,
SoundCloud, Spotify and Substackpages, and keep track of us
during the week on Facebook andTwitter.
(49:53):
This has been Brad Keithley,Managing Director of Alaskans
for Sustainable Budgets.
We look forward to you joiningus again next week on the Weekly
Top Three.
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