Big Oil Projects Put in Jeopardy by Fall in Prices

From the plains of North Dakota to the deep waters of Brazil, dozens of major oil and gas projects have been suspended or canceled in recent weeks as companies scramble to adjust to the collapse in energy markets.

It would be foolhardy to depend on today’s lower energy prices – in this stalled economy – to determine whether or not we should develop alternatives to oil – as within two years we are going to be faced with the same climbing energy prices and the same scarcity of oil.

In the short run, falling oil prices are leading to welcome relief at the pump for American families ahead of the holidays, with gasoline down from its summer record of just over $4 to an average of $1.66 a gallon, and still falling.

But the project delays are likely to reduce future energy supplies — and analysts believe they may set the stage for another surge in oil prices once the global economy recovers.

Oil markets have had their sharpest-ever spikes and their steepest drops this year, all within a few months. Now, with a global recession at hand and oil consumption falling, the market’s extreme volatility is making it harder for energy executives to plan ahead. As a result, exploration spending, which had risen to a record this year, is being slashed.

The precipitous drop in oil prices since the summer, coming on the heels of a dizzying seven-year rise, was a reminder that the oil business, like those of most commodities, is cyclical. When demand drops and prices fall, companies curb their investments, leading to lower supplies. When demand recovers, prices rise again and companies start to invest in new production, starting another cycle.

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Palin’s star burns brightly as Oprah calls

Sarah Palin continues to attract huge media interest despite her failed bid to become vice president.

ANCHORAGE, Alaska (AP) — Oprah wants her, and so do Letterman and Leno. Fresh from her political defeat, Sarah Palin is juggling offers to write books, appear in films and sit on dozens of interview couches at a rate that would be astonishing for most Hollywood stars, let alone a first-term governor.

Sarah Palin continues to attract huge media interest despite her failed bid to become vice president.

The failed Republican vice presidential candidate crunched state budget numbers this week in her 17th-floor office as tumbling oil prices hit Alaska’s revenues. Meanwhile, her staff fielded television requests seeking the 44-year-old for late-night banter and Sunday morning Washington policy.

Agents, including those from the William Morris Agency, have come knocking. There’s even been an offer to host a TV show.

“Tomorrow, Gov. Palin could do an interview with any news media on the planet,” said her spokesman, Bill McAllister. “Tomorrow, she could probably sign any one of a dozen book deals. She could start talking to people about a documentary or a movie on her life. That’s the level we are at here.”

“Barbara Walters called me. George Stephanopoulos called me,” McAllister said. “I’ve had multiple conversations with producers for Oprah, Letterman, Leno and ‘The Daily Show.’ ”

Asked whether Winfrey was pursuing Palin for a sit-down, Michelle McIntyre, a spokeswoman for Winfrey’s Chicago-based Harpo Productions Inc., said she was “unable to confirm any future plans” for the show.

Palin may have emerged from the campaign politically wounded, with questions about her preparedness for higher office and reports of an expensive wardrobe, but she’s returned to Alaska with an expanded, if unofficial, title: international celebrity.

Sen. John McCain plucked Palin out of relative obscurity in late August and put her on the national Republican ticket. Now, she has to decide how and where to spend her time, which could have implications for her political future and her bank account, with possible land mines of legal and ethical rules.

Palin is considering about 800 requests for appearances from December through 2009, with 75 percent coming from out of state. A year ago, just a sprinkle of requests came from beyond Alaska’s borders. They range from invitations to speak at the Chief Executives’ Club of Boston, Massachusetts, and to attend a 5-year-old’s birthday party, from a prayer breakfast in Cedar Rapids, Iowa, to a business conference in Britain.

Michael Steele, the former Maryland lieutenant governor who wants to be the next chairman of the Republican National Committee, is seeking face time.

She has invitations to make appearances in 20 foreign countries, typically with all expenses paid, McAllister said. She has more than 200 requests for media interviews, again from around the globe.

“She has to pace herself,” suggested veteran Hollywood publicist Howard Bragman. “She wants a career made in a Crock-Pot, not a microwave.”

In her two months on the national stage, Palin energized the Republican base but turned off moderates and independents, according to some surveys. Flubbed answers in national television interviews raised questions about her competence. She was embarrassed by the disclosure that the RNC spent at least $150,000 for designer clothing, accessories and beauty services for her and her family.

The right book or movie deal could help Palin reintroduce herself to the nation, on terms she could dictate.

Although books and movie deals could be worth millions of dollars, it’s not clear whether Palin would be able to legally earn it. State rules say she cannot accept outside employment for compensation. But there appears to be little in the way of precedent left by former governors to judge if book deals or lucrative speaking appearances amount to “employment.”

Palin has sent unmistakable signals that she is open to running for president in 2012, but to advance her political ambitions, she must stay in the public eye in the lower 48 states.

As with any celebrity, there is the risk of overexposure. At the same time, she’ll be under pressure to attend to governing her home state, which is thousands of miles from the rest of the nation.

“She has to deal with the perception that she bobbled her debut,” said Claremont McKenna College political scientist John Pitney. “She needs to stay home for a while. If she wants a future in national politics, her No. 1 job is doing a good job as governor.”

Just this week, shortly after conducting a string of national TV interviews and skipping a state education conference, she was scolded by the Anchorage Daily News.

“There are … low graduation rates, plummeting North Slope oil prices, proposals to build alternative energy projects, the gas pipeline,” the paper said in an editorial. “It’s time for the governor to refocus on Alaska’s needs.”

Source: CNN
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Back Home, Palin Finds Landscape Has Changed

ANCHORAGE — Gov. Sarah Palin has returned to Alaska fully recast and amplified.

Adored by many national conservatives, Ms. Palin is a prospect for a presidential run in 2012, supporters say. Caricatured by opponents, she is a candidate for political oblivion, say others.

Regardless, Ms. Palin told reporters the day after Election Day, “This has been all positive for me.”

Alaska, too, has been recast and amplified in the 10 weeks since Ms. Palin soared to national prominence as the Republican nominee for vice president, and the process has not necessarily been all positive.

Oil prices, which provide the bulk of state revenue, were well over $100 a barrel in late August when Ms. Palin left to campaign with Senator John McCain. Now they are slumming south of $60 a barrel, below the level required to balance the state budget. Increased scrutiny of Ms. Palin’s time as governor often painted an unflattering portrait of her administration. Investigative news reports have portrayed Ms. Palin as being consumed with personal matters and vindictiveness, particularly in the controversy over the firing of her public safety commissioner in what has become known as Troopergate.

Many Democrats, her allies in passing key legislation to raise taxes on oil companies and spur development of a natural gas pipeline, are outraged by her partisan attacks on now President-elect Barack Obama and on the tactics of the McCain-Palin campaign here at home.

Within the state’s Republican establishment — never Ms. Palin’s comfort zone — there is tension over the fate of Senator Ted Stevens, who was convicted last month of failing to disclose gifts and free home renovations he received. Ms. Palin called on Mr. Stevens to resign even as state Republicans urged his re-election. A preliminary vote count suggests he could win a seventh full term.

Even if Mr. Stevens wins, he could still be forced to resign, and Ms. Palin is widely viewed as a strong candidate to win his seat in the special election that would have to be held to replace him.

Ms. Palin has largely dodged questions about her long-term political future, and as she gets back to governing full time, few people know what to expect from her in the immediate future.

“She’s coming back to a whole different world from when she left,” said State Representative John Coghill, a Republican from North Pole who is chairman of the powerful House Rules Committee. “If she comes back with a puffed up ego there’s going to be problems. But if she comes back ready to work, that will be better.”

Ms. Palin, in an interview in her office on Friday, said she was ready to work.

“Now we kick in that fiscal conservativeness that needs to be engaged, and we progress this state with $57-a-barrel oil,” Ms. Palin said. She said the state would have to “be prudent with public dollars and provide services more efficiently than have ever been provided in the state of Alaska before.”

The price and production of oil determines state finances: taxes on oil bring in about 85 percent of state revenue. To balance the budget for the 2008-9 fiscal year, the price of oil needs to average $74 over the 12 months, said Karen J. Rehfeld, director of the state office of management and budget. If it falls below that average, the state could have to make emergency cuts or dip into a reserve account that contains several billion dollars. High prices early in the fiscal year may help keep the average up this year, but next year is another matter.

Ms. Palin, first elected governor in 2006, has governed only in times of budget surpluses, and lawmakers said they had many questions about how she would lead now.

“I just don’t know what kind of philosophy she’s going to have when she comes back,” said State Representative John Harris, a Republican and the departing House speaker.

Noting that his chief of staff, John Bitney, was once the governor’s legislative director, Mr. Harris added, “We were just trying to figure out what kind of policy things the governor may want to address and we were kind of scratching our heads, because we don’t know.”

Mr. Harris was among several lawmakers who questioned whether Ms. Palin would spend the rest of her term, which ends in 2010, positioning herself to run for national office. Would she pursue a socially conservative agenda, promoting bills to restrict abortion or gay rights, issues she largely passed on in her first two years in office because she was trying to win support from Democrats on other issues? Would she move to the center? Would she continue to rail against “the old boy network,” stoking her reformist image at the expense of her fellow Republicans, whose party has been tarnished by corruption scandals, including that of Mr. Stevens?

Ms. Palin rejected the idea that she would be playing to a larger audience.

“My actions will continue to be first and foremost in good service to the state of Alaska,” she said in the interview.

But other than suggesting that cost cuts were to come, Ms. Palin did not hint at a broader agenda.

The governor is due to submit her 2009-10 budget next month, and neither she nor her aides offered specifics about what it might contain. The McCain-Palin campaign portrayed Ms. Palin as an energy expert, and one top priority Ms. Palin expressed well before she was selected to run for the vice presidency was to improve energy sources for different parts of the state. That includes finding cheaper sources of energy for rural villages, which often rely on inefficient diesel power, as well as for cities like Fairbanks, the state’s second largest, where utilities rely on oil and coal.

The state also faces questions over issues like financing Medicaid, increasing mining in environmentally sensitive areas and spending on transportation projects, as well as the complex negotiations involved in trying to develop the gas pipeline with the cooperation of the same oil companies whose taxes Ms. Palin has raised.

Ms. Palin’s partisanship on the campaign trail may be what most surprised people at home.

“She’s coming back to a divided state, where Democrats had supported her but they watched her for two months call the president-elect of the United States a terrorist sympathizer,” said State Representative Les Gara, Democratic of Anchorage. “She called him a socialist.”

Her partisanship also surprised some conservative Republicans, who were accustomed to feeling ignored while Ms. Palin nurtured alliances with Democrats and moderate Republicans. Now, some Republicans who have been at odds with Ms. Palin in the past are wondering if her partisan tone on the campaign trail might mean they will have her ear more than before.

“It appears that way,” said Mr. Coghill, the Republican from North Pole. Mr. Coghill said Ms. Palin’s emphasis on socially conservative issues on the campaign trail has helped persuade him that now is the time to ask Ms. Palin to actively support a bill that would require minors seeking abortions to notify their parents in advance.

“There are some people in our caucus who are skeptical” that Ms. Palin might ally herself more with Republicans now, Mr. Coghill said. “But they’re willing to take the chance, to step up and play.”

Ms. Palin suggested in the interview that how she ran for vice president would not shape how she governs Alaska.

“If anybody wants to try to criticize and say, ‘Oh, all of a sudden she’s an obsessive partisan,’ they’re wrong,” she said.

But she did allow that she thinks beyond her current role.

“Around every corner is something new,” Ms. Palin said, “so I look forward to seeing what happens next. But for now, it’s great to be back in the governor’s office.”