Pipelines on January 1, 2012. 
Alaska Senate President Gary Stevens (NGP Photo) spoke at Commonwealth North in Anchorage on Wednesday, December 14, 2011. In his speech, he set the terms for the legislative discussion on the future of Alaska oil taxes for the next session of the legislature. Below is a copy of his prepared remarks from the Senate Majority press office. Readers will find the audio here. – Alex Gimarc
Senator Stevens’ Prepared Remarks
Thank you for inviting me to speak. Frankly, you’ve got a lot of nerve. I stand before you as the recipient of an "F" from the Alaska Chamber of Commerce and the Resource Development Council. Legislators were given grades by these organizations -Apparently based on our support or lack of it for the Governor’s Oil Tax Bill, HB 110. So, the biggest issue facing the legislature this year is STATE OIL TAXES. Big surprise, right? This has been the biggest issue for many years running.
All Representatives who got A’s voted for the Governors oil tax bill, while those of us who got D’s and F’s either voted against it in the House, or like myself, dared to question it in the Senate. Former Governor Jay Hammond was a constituent of mine for several years after he left office. Hammond, liked to quote Article 8, Section 2 of the Alaska Constitution: 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. (More)
That’s people, not businesses or corporations but the people of Alaska -You.
It’s a very unusual constitution in this regard. Now, you should know, I love the oil industry. I want to see more oil flowing through the pipeline. Oil provides jobs to Alaskans as well as lots of jobs to outsiders. But it is our oil, and Prudhoe Bay belongs to us. It is true Oil pays the bills here in Alaska. Some 90% of our annual revenue comes from oil taxes. So, we like you, we respect you, and we need you. We want you to be profitable.
So let’s not forget the constitution or Jay Hammond. But, to be fair, let’s not forget the abuses we have suffered at the hands of the oil industry.
Remember Edmund Burke’s famous quotation -Those who don’t know history are destined to repeat it. I don’t want to dwell on those abuses but I would ask you to remember just 3 events in our historic relations with the industry, so we won’t repeat them. Surprisingly enough so many Alaskans, don’t know or remember these events:
1. Remember Amarada Hess, when the industry was found guilty of falsification and depriving the state of nearly 1 billion dollars
2. Remember the Exxon Valdez, when the industry despoiled our environment from which it has not fully recovered even today
3. Remember Bill Allen, when some of our elected politicians were bribed and sent to prison
Those 3 events are not the only abuses we have experienced. These are just the 3 I’d like you to remember
Alaska v. Amarada Hess was a court case which found that from 1977 to 1992 companies were guilty of "deliberate falsification in computing the price paid to Alaska for its royalty oil." And ended with the judge saying that we, the state, were guilty of "inexcusable trustfulness" in dealing with the oil companies.
You did get that, didn’t you? : The judge said we trusted the oil companies too much. That we were guilty of inexcusable trustfulness, WOW. I think you can get into heaven for that.
1989 Exxon Valdez oil spill was a disaster I well remember. With enormous damage to Prince William Sound, the Alaska Oil Spill Commission said Alaskans were abused in Exxon’s approach towards risk management saying the company showed "a corporate culture of irresponsibility" and was unwilling to jeopardize profit when it came to safety and risk mitigation.
I was elected to the legislature in 2000 and was surprised to see Bill Allen and Veco employees so often in the halls and offices of the capitol. As we now know some of our elected public officials were bribed yet still voted on oil tax bills and even went to prison for their actions.
So, that’s all in the past, you may say things have improved greatly and I want to believe that-
Still, the wise person, learns from history and remembers our past. We don’t want to be accused again of inexcusable trustfulness. We don’t want anyone to think that a culture of irresponsibility is OK And we don’t ever want to see our elected politicians bribed.
To maximize benefits to the industry and to the people – What’s good for the industry may not be good for you.
So, let’s get back to our current situation and the bill introduced by the Governor. It is HB 110 and readily, if barely, passed the House and was sent on to the Senate. It gives away billions of dollars in taxes to the oil industry. Upwards of $9 to $10 billion of your money with very little in return to Alaska.
We have been asking the Administration for months to give us some proof this will do Alaska some good. We asked them to make their case -Give us reasons to vote for it. Show us the proof that we get something out of giving up billions. What does it mean at various oil prices? We have yet to receive that information. And I hope it will be forthcoming before our session begins in January.
Jay Hammond was asked how he would tax the oil companies and he said, "For every cent we could possible get." Sometimes, even I think Governor Hammond may have gotten a little carried away. I think what he meant was that Alaskans need to get their fair share. He knew the job of the oil company CEOs was to maximize benefits for their shareholders.
And they have done that. They have made enormous profits. And I don’t question that they should make enormous profits. They have done well for themselves and for us. But Hammond saw his job, as Governor of Alaska to do the same for his shareholders – to maximize benefits for you -to make sure Alaska got its fair share.
So, the Senate still has the Governor’s bill, HB 110. Right now, it is in Senate Labor and Commerce Committee. They are studying the issue of jobs. We all know how important this is to Alaskans. We have been told, if we pass HB 110, that more Alaskans will be hired on the North Slope. But as the committee has done its work, they have found we have nearly as many jobs now as we have ever had and they found that the lion’s share of new jobs have gone to outsiders, not to Alaskans.
The normal course for HB 110 would be to go to Senate Resources, to Senate Finance, then to the Senate Floor. Many Senators have concerns about the bill.
Real and important questions. I suspect if it does make it out of the Senate it will only be with major changes. A big issue is that of progressivity. Which is the tax we charge when oil reaches high levels of value. This I think is something that could be done and might give the oil companies the relief they seek. Also we will be discussing heavy oil. My priority is and will remain to provide for the maximum benefit to the people of Alaska
It is quite telling that Pedro Van Meurs, an international oil consultant in his presentation here in Anchorage earlier this month implied that Alaska tax rates are not particularly out of line with other regions and suggested that there may be no need to make significant changes in Alaska’s oil tax program.
He did not recommend approval of the Governor’s HB 110. This is the best evidence yet that the Senate was right. Let me say that again, Pedro Van Meurs comments are the best evidence yet that the Senate was right.
The past session and this interim have been most contentious. The Senate did not rush to pass the Governor’s oil tax give away bill. We were called a "do nothing" senate because we would not be rushed into a precipitous decision that could cost the state billions with little in return
In conclusion – Have I mentioned the State Chamber of Commerce and the Resource Development Council? I think I did: As you know they gave those of us who dared question the Governor’s oil tax bill failing grades. They gave D’s and F’s to just about every Representative who voted on the House floor against the bill. Realize the vote was 22 to 16, so that’s hardly a landslide. They also gave failing grades to all the Senators who dared ask questions about the bill
Many of those representatives and senators are right here in this room, right now. Look around you and maybe you will see members with giant letters on their chests. It’s right there if you can’t see it. Sort of like a target. A Giant Scarlet Letter. Though I prefer to think of it as a Red Badge of Courage.
Anyway, thank you for inviting me.
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