“There’s nothing so absurd that if you repeat it often enough, people will believe it,” James wrote.
Well, Brena repeated the words “fair share” 40 times during his two-hour, 71-slide presentation.
In Brena’s mind, “fair share” means fixing Alaska’s fiscal mess by jacking up taxes on the oil industry and changing our tax policy for the seventh time in 12 years. He forgets that our own Commissioner of Revenue, Randy Hoffbeck, has repeatedly said that the state is collecting more money under our current tax policy called SB 21 than we would have under the old one, called ACES. To quote him: “SB 21 brings in substantially more revenue to the state at low prices.”
Forget that the oil flow through the pipeline actually increased in 2016 for the first time in more than 14 years.
Forget that our current tax policy lured new explorers which made two of the world’s largest oil discoveries in decades. And ConocoPhillips continues its string of discoveries in an area other companies gave up on years ago.
Forget that the industry invested more than $5 billion in Alaska at a time they were hemorrhaging dollars. As BP recently testified, “In 2016, we lost over a million dollars each day in Alaska.”
Forget the advice of ExxonMobil tax counsel Dan Seckers, who said, “The need for Alaska to maintain a competitive fiscal regime that encourages critical, ongoing and long-term investment is by far one of the most important issues you face.”
Forget what companies like Hilcorp have meant for our state. This independent company almost single-handedly doubled oil production in Cook Inlet and turned a natural gas deficit into a surplus. Now they’ve found a formula to develop Liberty, one of the largest potential sources of new light oil production on the North Slope, with an estimated 80 million to 130 million barrels of recoverable oil.
Hilcorp has invested more than $1 billion in Alaska but they, too, want and need certainty. As they said, “If the Alaska Legislature makes yet another tax policy change this year, we will adjust our investment spending in Alaska accordingly.”
Mr. Brena, why do you continue to mislead Alaskans by implying that our production taxes are the only state tax on the oil industry? You ignore the fact that in addition to production taxes, the industry pays Alaska 12.5 percent of revenue in royalties, 9.4 percent of profits in state income taxes, and local property and federal income taxes.
You suggest that revenue be split 1/3 for Alaska, 1/3 for the producers and 1/3 for the federal government. You ignore the fact that oil companies would pay 100 percent of the expenses out of their 1/3, after assuming 100 percent of the business risks. Please quit trying to mislead us and quit trying to drive away the industries that determine our economic future. (Northern Gas Pipelines note: Esteemed oil and gas economist Roger Marks clarifies: “When the producers pay a percent of gross, part of the gross includes their costs, so in effect they are paying, in addition to costs, a tax ON THEIR COSTS, rather than on their income.” -dh)
And why do you ignore the Alaska Department of Revenue data that clearly shows that under the current tax policy, Alaska takes in more revenue than the producers at all oil price levels? Alaska receives substantial revenue, even when the companies are breaking even or losing money. Our current tax policy is already fair to Alaska, perhaps too fair.
Our state is built on oil and is fueled by oil. Why would we declare war?
How are we going to foster a growing economy for our kids and grandkids when you advocate for continually raising oil taxes and regulations, which result in less long -term capital being committed to oil production?
How are we going to ensure the industry keeps investing $3-4 billion per year to keep our legacy fields producing at a sustainable levels?
How do we keep attracting high paying jobs that have been the key to our increased standard of living and strong economic growth for 40 plus years?
How will we fund state government when oil production dives because we cannot attract the capital investment we need because we continually change the tax burden?
The oil industry supports a third of our economy. We need to keep it healthy, and that, Mr. Brena, is much more complex than your hollow mantra of “fair share.”
Rick Boyles is secretary-treasurer of Teamsters Local 959 and founding member of KEEP Alaska Competitive.