Interior legislators who voted last week to ratchet down the state’s oil tax rate deserve a round of applause.
It wasn’t an easy vote, as several noted. Critics of the legislation want to kill it with a thousand detailed questions.
Legislators who voted for the oil tax reduction acknowledged they don’t have answers to all those questions. Yet Reps. Steve Thompson, Tammie Wilson, Eric Feige and Alan Dick all voted for the tax cut.
They and the majority of House members recognized that answers to the thousand questions won’t change the known fundamentals of the situation: Alaska’s production tax on oil is a unique, extremely progressive device that captures the majority of profits when oil prices are high, as they are now. The tax rate isn’t the highest in the world, but it’s high enough that it discourages investment in Alaska when projects here compete with those elsewhere.
To illustrate why this is dangerous to the state’s future, Alaskans should ask themselves this question: “What would I do?”
Would you choose to put your money in a business where potential returns in the good years are extremely limited by high tax rates? Perhaps you would invest in such a business, if other factors argued strongly for it. Those factors might include stability and security. But each one of those factors would have to fight against your fundamental inclination to invest for a better return.
It’s no different for an oil company. Alaska remains attractive to companies, despite its high tax rate, because it offers other advantages. But when the companies decide where to invest their profits, they cannot ignore those taxes. Other places, places that might possess all or most of Alaska’s qualities, don’t disadvantage themselves so badly with their tax policies.
It might seem counterintuitive to many people, but disadvantageous tax rates are most damaging to Alaska precisely when oil companies are making large profits. That’s when companies have money to reinvest. That’s when they’ll be looking for the best places to put that money. Assertions that the oil companies’ profits prove they don’t “need” this tax break are irrelevant. The important thing is what Alaska needs — reinvestment of those profits here.
A majority of House members recognized that need on Thursday. Now the Senate should recognize the same.
"I hereby challenge Dan Fagan, Rick Rydell and the Industry Alliance sponsors of those “Faces of ACES” ads to debate the content of this column and their ads — any time, any place, any audience."
http://www.frontiersman.com/articles/2010/07/13/opinion/columnists/doc4c3c181c5a78a710243610.txt
This pretty much says it all when look at what the lobbyists made this session and who paid them.
Tell me why any Legislator, would vote in the affirmative for any bill with dangling, unanswered questions. That's like throwing darts and having to accept where they land, with out question. One thing is for sure. There are no guarantees in life but to we have to make it worse by blindly going where no man has gone before?
Why don't you just say, Give the Oil Companies what they want and pray they return from North Dakota where that State is so stupid they give their oil away."
Or thanks to Big Oil for allowing us to try and give them more."
What this Alaskan would say is that as a Conservative I think our Conservative Senators really have it right. So did Tammie when she said she had no clue what she was doing when she voted with her caucus.
The gist of this editorial is give them what they demand and they might be here in two years, or we are toast.
That sounds like extortion or bribery or bullying or all three? Sounds like Al Capone
Of the three major producers only Conoco-Phillips is required to report financial results on an annual basis. It is a safe assumption that Conoco-Phillip's results are roughly equivalent to those of British Petroleum and Exxon/Mobil for their Alaska operations. In 2010 Conoco-Phillips earned a net profit from its Alaska operations of 1.735 billion dollars; or $20.00 per barrel of oil produced. That is a substantial profit and it is reasonable to expect that a return of roughly the same order will be forth coming if leases continue to be explored, developed and produced.
Why then are the three majors not exploring, developing and producing more in Alaska? The answer is really quite simple: their return on investment is higher elsewhere; reportedly twice as much in some producing regions. However, that upside investment opportunity elsewhere does not remove the contractual obligation to explore, develop and produce their Alaska leases. Nor does an upside investment opportunity elsewhere for British Petroleum, Conoco-Phillips, and Exxon/Mobil replace the Alaska State Constitutional responsibility of the Governor and the Legislature to uphold the State's laws and ensure that the State's natural resources are "utilized and developed for the maximum benefit of its people".
Unfortunately, the editorial board missed the basic premise of commerce in a modern western democracy: the law and legally based contracts; in this case the lease agreements between the State and British Petroleum,Conoco-Phillips and Exxon/Mobil. Our laws and subsequent contract terms must be enforced by the Governor and the Legislature; otherwise, the real danger to our Alaskan Democracy is that the law will be supplanted by money and the resultant application of political power and influence.
Alaskans should support those in the Legislature who understand the law and have the courage to uphold it. Alaskans should also say "shame on you" to those members of the Legislature who failed to understand the law and yielded to the power and influence of a very powerful industry and their self-interested supporters.
http://www.frontiersman.com/articles/2010/07/13/opinion/columnists/doc4c3c181c5a78a710243610.txt
I'd be embarassed to write such an editorial. The basic thesis of which is:
"We do not have the facts, but lets ignore our constitution and give away billions to the wealthiest corporations in history and bankrupt Alaska."
This would be funny if this situation was not so serious.
My take on the Newsminer ed.: don't ask so many questions, give billions to Big Oil in exchange for hollow promises. Banana Republic, here we come (are).
AK Constitutional Provisions
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Section 1.1 - Inherent Rights.
This constitution is dedicated to the principles that all persons have a natural right to life, liberty, the pursuit of happiness, and the enjoyment of the rewards of their own industry; that all persons are equal and entitled to equal rights, opportunities, and protection under the law; and that all persons have corresponding obligations to the people and to the State.
This constitution is dedicated to the principles that all persons have a natural right to life, liberty, the pursuit of happiness, and the enjoyment of the rewards of their own industry; that all persons are equal and entitled to equal rights, opportunities, and protection under the law; and that all persons have corresponding obligations to the people and to the State.
Section 8.2 - General Authority.
It is the policy of the State to encourage the settlement of its land and the development of its resources by making them available for maximum use consistent with the public interest.
Section 8.3 - Common Use.
The legislature shall provide for the utilization, development, and conservation of all natural resources belonging to the State, including land and waters, for the maximum benefit of its people.
Yeah why dont we give it ALL to them and let them decide how much they will give back to us. DNM at its chamber of commerce best.
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Prove it Newsminer. Yes we know the oil companies are threatening to pull their advertising if you don't get on board with their attempted blackmail. And you wonder why we no longer trust you?