The Oil and the Glory

RIP Ted Stevens, architect of the Alaskan petrostate

RIP Ted Stevens, architect of the Alaskan petrostate

This is turning out to be a grim week here at O&G — yesterday Matthew Simmons, today, former Senator Ted Stevens, Republican of Alaska, who died Monday night after his plane crashed in Alaska’s Bristol Bay region.

Stevens was a gruff politician of the old school, of a generation of senators whose other members — Fritz Hollings of South Carolina, Robert Byrd of West Virginia — have nearly all retired or passed on. It’s hard to overstate the stature he enjoyed among Alaskans, who routinely referred to him as Uncle Ted, and who kept him in office for all but one decade of Alaska’s half-century of statehood. In the view of his constituents he was less Alaska’s senator than its patriarch, the leader who guided Alaska’s transformation from a territorial outpost to a modern petrostate.

Although I lived in Alaska during the last years of Stevens’s four-decade tenure in the Senate, I never saw him in person until a Thursday morning in late September 2008, when he arrived at a federal courthouse in Washington for the first day of the corruption trial that would end his political career. The most striking thing about Stevens, as he climbed out of the van in front of the courthouse entrance, was how small he was. He looked maybe five and a half feet tall, towered over by the members of his expensive legal entourage as they made their way into the building. At that moment I realized the full extent to which my own image of Stevens, even as a journalist who was often critical of him, had been unwittingly shaped by the senator’s mythical standing in his home state. I had envisioned a giant.

There’s a formal elegance in the fact that the two forces that shaped modern Alaska more than any other — oil and Ted Stevens — arrived within months of each other. In 1968, shortly before Stevens was appointed to replace the recently deceased Senator Bob Bartlett, geologists for the Atlantic Richfield Company found the largest oil reserves in the United States on Alaska’s North Slope. Crucially, the oil was on state, not federal land — thanks in part to Stevens’s deft Washington maneuvering in the leadup to statehood — meaning the bulk of the royalties would stay in Alaska. It was Stevens who helped draft a claims settlement with Alaskan Natives — who had legal right to much of the state’s land — that enabled the construction of the mammoth Trans-Alaska Pipeline that connected the North Slope oil fields to the port of Valdez, completely transforming Alaska’s borderline-nonexistent economy.

By dint of its geographical isolation and the contentious relationship with the federal government that Alaskans carried with them from the territorial era into statehood, Alaska gradually became an odd sort of de facto petrostate, within the United States but not really of it. Oil money brought the Alaskan government the resources it needed to build clinics and schools across its vast hinterland, which even today is exotically undeveloped by American standards. (As recently as the ‘90s, state leaders were waging a public health campaign against the "honey bucket", a container that residents of remote Arctic communities, lacking indoor plumbing, used in lieu of a toilet.) But it also lashed the state to the fortunes of the tumultuous energy market. Alaska rode high at times of geopolitical disorder — the OPEC embargo, the Gulf War — and fell hard when oil prices descended, as they did in the early ’80s and late ‘90s.

As he rose to influence on Capitol Hill, Stevens became gifted at smoothing out these bumps in Alaska’s perpetual economic roller coaster ride. A master of legislative small print, he created a massive pipeline of federal subsidies that funneled billions of dollars a year — more per capita than any other state for most of the past 25 years — north to his constituents. In the end, he was too good at what he did: Accustomed to complementary flows of oil money and federal dollars, Alaskans never managed to establish much of an economy beyond the oil and gas industry. (Alaska’s next largest export, seafood, produces less revenue for the state than cigarette taxes.) Citizens got in the habit of judging, and electing, politicians based on their ability to keep these two faucets — the North Slope and the U.S. Treasury — open.

In the end it was this intermingling of oil and politics that brought down Stevens, along with a solid cross section of Alaska’s Republican political establishment. On August 31, 2006, federal agents raided the offices of half a dozen members of Alaska’s state legislature, emerging with boxes upon boxes of evidence. During the previous legislative session the investigators had amassed hours of video and audio tape of the lawmakers, in bugged rooms of the Baronof Hotel in Juneau, taking bribes from representatives of Veco Corp. — an oilfield services company which, in a quintessentially Alaskan transformation, had begun pulling double duty as a lobbying enterprise, trying to secure more industry-friendly tax rates on the North Slope oil fields. "I just sold my soul to the devil," a state representative jokes on one of the tapes. "Now I own you," Veco’s chairman, Bill Allen, jokes back.

Thanks to oil revenues, Alaskans pay no state income tax and get a dividend check, usually in the $1,000 range, from the state’s investments each year. As such they are bullish on the energy industry, relentlessly pro-development and generally forgiving — if not outright encouraging — of politicians’ closeness with oil and gas interests. But the legislators who had conspired with Veco had broken the unspoken covenant that bound Alaskans, the oil industry, and state lawmakers. It was all well and good for industry to color outside of the lines as long as Alaskans were profiting from the deal. But in the Veco scheme, the state’s citizens themselves had been the biggest losers.

The scandal eventually reached Stevens, who was indicted for allegedly receiving gifts from Allen in the form of furniture, home remodeling, and — only in Alaska — a bronze statue of migrating salmon. The charges were eventually dropped after a farcically bungled prosecution by the Department of Justice’s lawyers, but not before Stevens, his popularity at home battered by his Veco ties, lost his seat to Anchorage’s Democratic mayor, Mark Begich.

Perhaps the one thing that can be said for Stevens’s death, happening as it did, is that it restores some of the mythical sweep to a story that had ended badly by both Stevens’s and his critics’ reckoning: a trial scotched on technical grounds, a career ended by a crime of which he was later cleared. Plane crashes are a constant hazard in the far north, a fact that Stevens — a decorated World War II pilot — knew as well as anyone. He had survived one already, a wreck on an Anchorage runway in 1978 that claimed the life of his first wife, Ann. Mark Begich’s father, himself a congressman, had died six years before that when his Cessna 310 disappeared en route from Anchorage to Juneau. It is among the most Alaskan of ways to go, a fact that surely would not have been lost on Uncle Ted.