Palin's oil stance more mainstream than maverick

ANCHORAGE — In November 2006, before Gov. Sarah Palin took office, a respected former Republican governor sounded the alarm against Alaska's powerful oil and gas industry.

"Alaska's governors must not be swayed by the wealth and political power of that industry," Wally Hickel testified in a hearing about a plan to reclaim vital natural-gas leases held by Exxon Mobil and others. "It's time to take those leases back. In fact, it's way past time."

The state did move against Exxon Mobil, starting a game of high-stakes legal chicken that continues. And the Palin administration later took other aggressive actions against the industry, something she and Sen. John McCain repeatedly have used to bolster her credentials as a self-described maverick.

However, a review of her administration's record on big oil shows a stance that, in many ways, is less maverick than mainstream.

Challenging the oil industry may have been somewhat unusual for an Alaska governor, but Palin did it at a time when the public was clamoring for change. And she did so with the help of Democrats, even following their lead on a key oil-tax issue.

Right place, right time

"Her luck was to be in the right place at the right time," said Beth Kerttula, an oil-and-gas lawyer, a Democrat and the minority leader of the state House. "It almost would have happened no matter who was governor."

Ever since McCain chose Palin, the ticket has touted the first-term governor's in-your-face relationships with oil and gas companies.

The campaign Web site says she "took on the oil companies" by starting a competitive process to build a natural-gas pipeline across the state; "sent a large share" of oil-tax revenue directly back to Alaskans; and "successfully fought the special interests, the lobbyists, the big oil companies and the good ol' boys network."

In the vice-presidential debate, Palin hit the theme hard: "You know what I had to do in the state of Alaska? I had to take on those oil companies and tell them 'no.' "

To an outsider, sticking it to the industry that supplies 85 percent of a state's revenue might seem a real profile in courage.

At the time, though, her views matched public sentiment. The governor, now No. 2 for a party that advocates low taxes and limited regulation, succeeded in her home state by raising taxes on its most important business and exerting government power over it.

Reaching out

Despite her partisan rhetoric on the campaign trail, Palin is known at home as a governor more than willing to work with the opposition.

"In Juneau, she was very respectful of Democrats," said Kerttula, the House minority leader, whose district includes the state capital of Juneau. "The only two issues that mattered — the oil tax and the gas line — were Democratic issues for a long, long time."

At the same time, Palin has alienated oil companies, who have found it difficult to negotiate on the key issues they faced.

"The word would be 'frustration,' " said Ken Boyd, a former director of the state's oil and gas division and now a consultant for oil companies. "I don't think the oil companies dislike the governor. I think they are frustrated with a lack of give and take."

Palin has tangled with the oil-and-gas industry on three pivotal issues.

The first is the Point Thomson oil-and-gas field, and the state's aggressive stance began before Palin became governor. Although her Republican predecessor, Frank Murkowski, was considered friendly to oil companies, his administration moved to yank a hugely valuable field away from Exxon Mobil and other leaseholders.

Engaging in a battle popular with the public, the state moved to strip the firms of their right to extract the oil and gas under Point Thomson. It said leaseholders had delayed far too long to develop the field, depriving the state of tax revenue from gas production.

The companies responded that they were working hard on the project; the dispute is in court.

Compared with Murkowski, Palin "hasn't done anything different, but she has shown tremendous resolve," said Kurt Gibson, deputy director of the state's division of oil and gas. "There has been a great deal of pressure brought by the industry to convince the government to cave, and she has said, 'I'm going to leave this to the professionals.' "

The second issue was securing an agreement for a pipeline that — if built, — would take natural gas from Alaska's northern coast to the Lower 48, by way of Canada.

Palin changed the direction Murkowski had taken, engineering a proposal to award the pipeline project to an independent firm and not to the state's major industry players. But she did it with the help of Democrats and for a project the public had demanded for years.

The third was the oil tax, which had been pushed for years by Democrats and found favor with an electorate increasingly annoyed with its benefactor industry.

The Murkowski administration also had pushed through an increase in the oil tax. But that legislation was ensnared in a widespread local corruption investigation and came to be seen as tainted.

"She doesn't have it in for the oil companies — that's not what this was all about," said the oil division's Gibson. "It was about re-establishing the relationship of mutual respect between the industry and the state of Alaska. ... She had the support of Alaskans in doing that — an incredible majority of Alaskans are in favor of what she's done and how she's done it."

All three issues — the Point Thomson take-back, the oil tax and the gas pipeline — had been brewing for years. Then, in 2006, the FBI stormed into the state, indicting a handful of lawmakers for their ties to an oilfield-services company.

Alaskans angry

By the time Palin ran for office, Murkowski was extremely unpopular, Alaskans held the Legislature in contempt, and big oil — despite essentially funding the state government and providing lucrative jobs to thousands of Alaskans — was knocked on its heels.

Ivan Moore, a local pollster, said that "given the absence of a public-relations disaster," Alaskans naturally are inclined to like the oil industry.

"You really have to go to the extreme environmental left wing to see people not preconditioned to like it," he said.

"Given the FBI's presence, it had become untenable for a politician to oppose oil-tax reform," said Les Gara, a Democrat in the state House from Anchorage.