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Terry Keenan Headshot

Palin's Crude Awakening

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Forget the Jackson 5, this was the weekend for the Palin 5, as the soon-to-be ex-Governor, Sarah Palin pointed to a poll of her five children as the true reason behind her abrupt decision to step down as governor of the Frontier state. "Four yesses and one hell, yeah!" was the verdict of the Palin 5, ranging in age from 15 months to 20 years. Surely, plucky Piper, gave the most enthusiastic thumbs' up.

But as with most things Palin, what you hear is often a manufactured reality. It's a fair bet that a few months from now it will be abundantly clear that the quirky dynamics of the Alaskan economy had a lot more to do with Palin's retreat than that family poll.

Why is Palin sick of being governor? Sure, there are the stories about how tough it was for Caribou Barbie to adjust to life back on Lake Lucille--even with her new status and new wardrobe. But in the end, the real deal-breaker for Palin may have been something as mundane as the price of oil, which has dropped like a rock since Senator John McCain picked her out of obscurity to be his running mate last August.

Oil? Yes, it's all about oil, and it hasn't been a pretty picture this past year if you run an oil exporter, whether you're an Arab Sheikh, or the leader of the 49th State. This has been a rude awakening for Palin who rode on the coattails of soaring oil prices during her first 18 months in office. From January 2007, when she was sworn in as governor, up until the time she became McCain's running mate in August of 2008, crude prices rose by more than 100 percent. And you betcha, much of Palin's so-called political achievements was tied to the action in the oil pits.

Remember the pit bull/hockey mom's boast that she was able to give every Alaskan an extra $1200 dollars in pocket money last summer? Oil. Alaska's enviable budget surplus? Oil. For Palin's Alaska it's now all gone the way of $4 dollar-a-gallon gasoline.

In fact, for the governor, the last 12 months have been a mirror image of her first 18 months on the job. At $64 dollars a barrel, oil prices are down more than 55 percent from a year ago. Sobering news if you're running a state that gets 80 percent of its revenue from the oil and gas business.

Earlier this year, Alaskan state lawmakers estimated that the state would run a deficit of $2-3 billion dollars this year, based on $75 dollar barrel oil. It's now 15 percent below that mark, and even bigger deficits are looming.

Lower prices not only mean that Alaska has less revenue to tax, the state's cut goes down along with prices. When oil was at $120 a barrel, Palin was sitting pretty as the state took in more than 40 percent of every barrel coming out of Prudhoe Bay. Today, that cut is only about half as much.

Do the math and you can see why Palin wants out of Dodge as soon as possible. The longer she hangs on as governor, the more of her oil-fueled achievements are wiped away. Now that's reason enough to call an audible.