Crooks & Liars: Koch to Palin/Murkowski: Lower our royalties or jobs go away

-By karoli

June 11, 2011- Well, here's an interesting little email (PDF) in the newly-released Sarah Palin collection.

In late June, 2008 around the time oil prices skyrocketed due to what we now understand to be rampant speculation, Koch Industries reached out to Lisa Murkowski and used her to reach out to Sarah Palin. Here's the text of Murkowski's letter to Palin: 

While I know it may seem paradoxical for an oil refinery to be facing significant losses at this time of record crude oil and gasoline/diesel prices, I am writing to ask you and your administration to immediately undertake a new review of the equity of the state's current royalty oil contract with Flint Hills Resources , which runs the state's largest oil refinery at North Pole.

As you well know the Flint Hills refinery, owned by Koch Industries, is vital to Alaska's economy for a host of reasons. Not only does the refinery employ 155 residents in the Fairbanks area , one of the largest manufacturing employers left in the state, the refinery also produces significant amounts of aviation fuel, which is one of the key reasons why the state's air cargo transshipment industry has boomed in the past decade at both the Anchorage and Fairbanks International Airports. Those shipments also constitute a vital revenue source for the state-owned Alaska Railroad. If the refinery were to close due to its losses, or simply convert into a fuel distributor of imported product, it would deny Alaskans of about 60 percent of their locally produced fuel, potentially requiring the state to purchase more expensive fuel from refineries in the Lower 48 States, further hiking prices for gasoline and other fuels – something that simply should not be allowed to happen at this time of record energy prices throughout the State.

I understand fully that there have been issues with the willingness of the refinery's parent company to fully "open their books" so that the state can confirm the actual level of losses that the refinery is facing. I would hope that a confidentiality agreement could be reached quickly should new negotiations open concerning revisions to the 2004 contract so that the State can fully inspect the financial health of the refinery. Given the fundamental importance of the refinery to the state's economy, I encourage the state to consider contract revision talks that could benefit the State overall and the Fairbanks economy in particular.

I know how busy you must be this summer and I thank you for your consideration of this important matter at this time of record fuel prices nationwide. Best wishes. 

Now, June, 2008 also happened to be when the murmuring for Palin to be nominated as John McCain's running mate was growing louder and stronger. Interesting timing, that.

John Katz, Palin's federal/state liason and special counsel, wrote this back in response:

The bottom line for us is that Tom Irwin and his staff are ready and willing to talk with Koch at any time, the gas pipeline notwithstanding. Recently, Tom stated this publically and, I believe, to Flint Hills directly. However, it is critical that Koch be willing to open its books, and they have been reluctant thus far.

At the moment, the State receives a $1 per barrel premium on royalty oil sold to Flint Hills. It is my understanding that the premium has crept up over the years and will likely be reviewed soon. 

There were also some forwards of a staff conversation mentioned, but not attached. However, there was this comment at the end of Katz' forward of the entire email exchange to the Alaska Department of Natural Resources: 

p.s. I don't normally forward exchanges with staff level people in the delegation, but I wanted you to get a flavor of the impact that Koch has had.

That's certainly an understatement.


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