WATCH OUT FOR THAT GIANT HOOKBy David G Hanger March 08, 2017
This rush to testimony that was sponsored and encouraged last week, purportedly to save the Permanent Fund and its dividend, was in fact purveyed by the very people who want to destroy state government on behalf of the oil companies. They are all first-line company lackeys and tea party fruitcakes who believe that no government is the best government. Your testimony to save the Permanent Fund will be used by these sold-out frauds to do the exact opposite, and destroy it. That is their goal; that is their mission; the oil companies think the Permanent Fund belongs to them, and their crooked, sold-out lackeys are ever so willing to give it to them. I have no idea where Dr. Michael Johnson got his Ph.D, but he should return it because quite frankly, Doc, lies don’t cut it. If all you can do is spew the party line that we have to find some other source of revenue than the oil companies with which to educate Alaska’s children, then nothing you can contribute to educating our children is worthwhile because you are trying to purvey your ignorance and shallowness as something of significance and consequence, when in fact it is simple shallow ignorance. We have plenty of adult Alaskans who are already there, and your contributing to making them dumber is not going to help. Nor will I tolerate you or Dan Ortiz using the education of Alaska’s children as a smokescreen for justifying the theft of Alaska oil by the oil companies, and an excuse to tax the rest of us before you deal with the fundamental problem that there is no state government, or any government at any level in this state, that at this time is doing anything more than cravenly crawling on your knees to the oil companies. THERE IS NO STATE GOVERNMENT. IT IS AN OIL COMPANY OPERATION. In 2016 despite lower prices the oil companies extracted more oil from the Alaska fields than they did in 2015. Indeed in each year for the past several the production levels have increased annually, and production levels are scheduled to increase again this year. That is the first lie, and one of the bigger ones. In 2016 despite lower prices the net profits of the oil companies on Alaska oil at an average of $48 a barrel were between $4.5 and $6 billion on about $9.5 billion of production. In addition the state of Alaska, using your Permanent Fund Dividend, paid the oil companies about a billion dollars on top of this net profit of between $4.5 and $6 billion. For any and all practical purpose no state tax or severance was collected on this net profit at all. That is the second big lie. These pigs scorched us for $7 billion in 2016 alone. OK, Dr. Michael Johnson, tell me why we have to find new sources of revenue, i.e. state income taxes, no Permanent Fund or Permanent Fund dividends, increased sales taxes, property taxes, and increased costs on every damned thing we need from food to toilet paper because you cannot see your way clear to join the chorus saying tax the goddamned oil companies? Why are you such a pathetic cop-out and sell-out? You claim concern about the children, yet your very gruel is oil company grist. Recall that in the first six weeks of 2016 the price of oil collapsed to $26 a barrel, and world over oil companies either stopped completely or curtailed considerably their levels of oil production; except in Alaska where production levels actually increased by five percent. DID YOU EVER STOP TO CONSIDER HOW AND WHY SOMETHING SO STUPID MIGHT BE DONE? This in fact is the key question and the big lie both, plus it solves a whole lot of other riddles. To comprehend this you need have some understanding of what the term “contribution margin” means, so let me give you a simple, but somewhat extreme example. Let’s say we have a company that produces two products in equal measure in terms of inputs and outputs, and our company has $10,000 a month in fixed costs and $15,000 a month in variable costs. Equal inputs and outputs in this instance, of course, means that the same number of each product are produced at an aggregate cost of $12,500 for each equally produced product line. These two products generate to our fictional company a total sales revenue of $30,000 a month for a net profit of $5000 a month. But Product 1 generates $20,000 a month, while Product 2 sells for only $10,000 in the month. Suddenly market conditions change and Product 1 sells for only $18,000 a month while Product 2 drops all the way to $5,000 a month, clearly not enough to cover $25,000 a month in costs. Market share limits severely how much the company can increase sales of either product. What does the company do to avoid bankruptcy? In this example they stop producing Product 2 because by so doing they eliminate half of their variable cost, or $7500, which reduces the monthly overhead to $17,500, while Product 1 sales are still at $18,000, thus a $500 monthly profit. But what happens if Product 1 sells now for $15,000 and Product 2 is still selling for $8000? If you cut out half your variable cost of $7500, your overhead is still $17,500 a month for a loss of $2500. But if you continue producing each product your aggregate of costs is $25,000 against $23,000 in sales revenue for a loss of only $2000. So your decision in this instance is to continue producing both product lines at least for the time being because you are losing less money by continuing to produce Product 2 instead of not producing it at all. The “contribution margin” to the company are the dollars a product pays to cover cost in situations like this. It is better to produce than not to produce because the bleeding is slower plus you maintain your staff. ANY PROFITS CAN BE USED TO COVER LOSSES ELSEWHERE. This is the game of patsy Alaska is playing on behalf of the oil companies. Because our oil is not being taxed even at $26 a barrel they can make enough money to not only cover their costs here, but can profit sufficiently to cover costs elsewhere that it justifies actually increasing production here in Alaska while outright ceasing production elsewhere. Alaska is financing multi-national corporations’ multi- national operations in a whole lot of other places, with our money, and some stooge like Dr. Michael Johnson wants you to believe the oil companies are not a source of revenue to educate our children. Fire this sold-out fool. The riddle solved is the big lie about production costs, by special law sponsored by the oil companies a top secret even to the state government, and which the oil companies persistently claim is around $45 a barrel. That is a lie to the extent that it is a fraud. Last year in January and February these people were producing more than 500,000 barrels a day of Alaska oil. If their production costs were $45 a barrel, they would be losing $10 million a day, or $300 million a month. No oil company is generous enough to increase Alaska oil production for the purpose of providing some jobs to carpetbaggers when they are losing $300 million a month by doing so, and particularly not these oil company pigs. So anyone believing this oil company crap is either stupid or bought and paid for by the damned oil companies, and I don’t care which I am sick of it. How can you be so goddamned dumb? How can you be such a crook? How can you care so little for the people of this state? Production costs for Alaska North Slope oil are between $20 and $25 a barrel, most likely closer to the former. We are financing the oil companies’ international operations with our money; they are covering their losses everywhere else on our backs. But Dr. Michael Johnson insists that we can no longer rely on Alaska oil as a source of revenue to finance the education of our children. Fire this horribly ignorant person. He has no credibility at all. This jobs creation program that the carpetbaggers who occupy the Anchorage/Fairbanks corridor expect us all to pay for is costing something like about $7 million a job per annum, so I hope all of you share my very deep resentment that this bunch of self-absorbed, greedy cruds thinks we are a bunch of welfare kings and queens when what I see is hardship and hard work and a place where people look out for their neighbors. Welfare kings and queens, my ass. From Barnett, The Pentagon’s New Map, p.49: “To be disconnected in this world is to be kept isolated, deprived, repressed, and uneducated. For young women, it means being kept—quite literally in many instances—barefoot and pregnant. For young men, it means being kept ignorant and bored and malleable. For the masses, being disconnected means a lack of choice and scarce access to ideas, capital, travel, entertainment, and loved ones overseas. For the elite, maintaining disconnectedness means control and the ability to hoard wealth, especially that generated by the exportation of valued raw materials.” Or as one brave soul testified, “Alaska has become a banana republic.” I quite agree; time to change the name to that old Indian word that everyone understands just by looking at it: OILASSEDYA. If Kyle Johansen’s analysis is anywhere near correct what it means is our choice for our next Governor will be between right winger and sold out oilman William “Oil Company” Walker and some alt-right freak from the Fairbanks area with the Democrats once again not even running a serious candidate. That means we are totally screwed because we have nothing but nut jobs and oil company crooks as what is called a government. The Chris Tuck and Dan Ortiz types are worthless because they put career before consequence, and I see no real judgment with any of them. I presented a very cognitive analysis in a few paragraph of what the true costs and profits of these oil companies are, but instead they persist in opting to believe the bullshit these oil companies hold in secret and refuse to tell them, and on this basis and this basis alone they are prepared to make any decision. If they rely on liars for all of their information, they are liars themselves; pathetic parrots, too. That is your banana republic, folks. Straighten it out, or the brain drain in the next couple years will shock you. At the local level it is just as bad. If you follow their lead, you are nothing but another oil company lackey, just the local goon putting the heat on. So Rodney, Mike, et. al, do whatever it takes. If your new borough manager is a dud working four hour days and demoralizing his staff, fire him on a contract violation. That’s easy enough. You don’t need me to do your dirty work for you. David G Hanger Received March 08, 2017 - Published March 08, 2017
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