To Elected Officials In Times Of Shortage, Increasing Taxes On The Few Is Easier Than Cutting Benefits Of The Many
Anti oil activists in Alaska, Canada and abroad are anxious to demonize companies for making money when prices are normal or high.
The well organized cabal of activists is not stupid, for its members realize that demonizing the wealth producers makes it easier to move money from the free market to their big government constituencies. They also know that royalties and taxes that are based on commodity prices enrich governments (i.e. “the people”) and provide investors with the confidence and ability to withstand lean times as well…but, that understanding does not benefit their agenda of wealth redistribution and, to them, is irrelevant.
The cabal of social, economic and cultural activists also knows its voting constituencies would not exist without a growing stream of financial infusions from the real wealth producers: and, what greater wealth producing sector is there than the oil and gas sector?
That stream of special interest entitlement spending must, indeed, grow whether wealth production profitability is bountiful, or as now, scarce. Therefore, the entitlement advocates must force free market forces to support their special interests even in times of scarcity. In essence, they must create such public pressure that logical economic decisions can be compromised if they are to sustain their entitlement voting constituencies.
Here is a link to ConocoPhillips’ current Security and Exchange Commission Form 8-K received today.
To an investor the results of such reports must be frightening, for they reveal the reality of low price pressures a company must endure, including: massive cost cutting, debt restructuring, capital spending reductions (i.e. affecting future income), higher effective tax rates, and much more.
Even with all of that effort, ConocoPhillips is experiencing financial losses in Alaska and most other operating areas. (It is to the company’s credit that it is maintaining a robust capital investment program in place for we imagine the pressures to invest less must be staggering.)
Our readers know well, by now, that other producers are experiencing similar job losses and cost cutting endeavors.
Meanwhile, we hear elected officials boasting of their cost cutting success while making few meaningful cuts in agency personnel or entitlement programs…with others suggesting that they need to take more from the oil and gas, mining, and other sectors of the free market. In other words, the focus is on keeping government whole, even at the expense of further taxing the private sector.
This week, the republicans are boasting about how their willingness to compromise is producing a “bi partisan and bi cameral” solution. The democrats are happy they have saved their special interests. What is the result: the can is kicked down the road as state savings accounts are further depleted.
In short, we close by coining this phrase we believe to be both true and applying to national as well as local politics: “The democrats (socialists) never compromise; the republicans always compromise.” (Note: Alaska democrats have aligned themselves with the socialist candidate for President and one of their principal constituencies consists of several dozen environmental activist groups that consistently oppose natural resource wealth production in Alaska.)
This is why Alaska is not resolving its fiscal crisis, why the United States culture, economy and crushing national debt threaten the Republic and why the enviro-governmental-business cabal is crippling the free market in both Canada and the United States of America.
Free market forces that continue to compromise the free market become complicit in the march toward socialist dictatorship like lambs being led to the slaughter.
But there is a solution: If free market forces recognize how they are compromising economic principles, common sense, cultural freedom and wealth production and begin to defend and insist on the pure values that made us the shining city on the hill, we can begin to recapture that greatness.
That is the good news!
If free market compromisers do not become effective free market defenders, they will have enabled the forces of socialism to successfully complete the acquisition of power.
Governor Pleads To Not Let Alaska “Go Broke”
Commentary from Ak-Headlamp:
“Do we have to go broke before we fix Alaska? I guess that’s my question to the Legislature,” Governor Bill Walker said. Gov. Walker has been under increased pressure to convince lawmakers, and Alaskans, on his fiscal plan. Legislative leaders called the budget responsible and a product of hard-fought compromise that further reduced state spending. But Walker’s budget director, Pat Pitney, said that in some cases it included use of one-time funding and booked expenses in the current year. That’s problematic because it will have to be accounted for in future budgeting, Pitney said. When you take those items into account, “we haven’t substantially moved the dial,” budget director Pat Pitney said.
Global leaders in moving backwards. According to IHS Energy Senior Vice President Atul Arya said Alaska is globally unique in discussing the possibility of raising taxes or cutting incentives during the prolonged downturn in oil markets. “What I find most interesting — in the most recent time, most everybody is creating incentives to help attract investments into their countries,” he said. “Even places like India and China, which are not really hotbeds of oil and gas activity, have done more to attract investors, and of course there are many other countries who are doing that in the last year or so.” The IHS official also noted the global demand for LNG will continue to grow to about 350 million tons by 2020.Headlamp couldn’t agree more with Arya! It makes no sense in an Alaskan, national, or even international context to tax an industry that’s already hurting. Alaska has the potential to be a global hub of energy production if bad policy doesn’t get in the way.
REI builds relationships across the Pacific. Resources Energy Inc. plans to move their project into the front-end engineering and design, or FEED, stage within the next few months. FEED should take roughly two years, at which point a final investment decision would be made. Construction would then take about another two years to put start-up sometime in 2020 or 2021. A Japanese delegation toured Port McKenzie and were impressed to say the least according to General Manager Mary Ann Pease. Pease said the Japanese delegation members continue to emphasize Alaska’s ability to reliably supportthe country’s energy security.
Wells Fargo, First National Bank Alaska, and Northrim BanCorp — have continued to increase loan portfolios and deposits, though they acknowledge the state’s precarious oil-driven position.
Wells Fargo — a sizable underwriter of oil and gas operations — has seen several revenue streams associated with oil and gas decline. More than 1,200 oil and gas industry workers received unemployment benefits in 2015, up 545 from the prior year. The Department of Labor indicates that this trend has continued through the first quarter of this year with a total decrease of 1,900 jobs in the oil and gas sector as compared to the same period last year.
Meanwhile, in Wyoming. After oil prices have slowly crept up to around $50, some Wyoming drilling operations have begun to reexamine oil production. The renewed optimism comes as analysts continue to debate oil’s trajectory. Kirkwood Oil and Gas, for example, has targeted $65 a barrel for a return to Powder River Basin, where the company has 90 undeveloped well locations. “I think things are going to pick up here. We’re betting on it,” said Steve Kirkwood, who runs the Casper-based firm. He projected the company could begin drilling again in the fourth quarter. Headlamp applauds Wyoming’s oil and gas producers wading back into the market despite the pervasive pessimism from some market critics, and hopes that Alaska will be joining them soon – if taxes don’t drive investment away.
The comment period on the Bureau of Ocean Energy Management (BOEM) outer continental shelf proposal closes in two weeks. Are you like Headlamp and think Alaskans should have the right to pursue safe, sustainable resource development?Tell the BOEM what you think here.