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Community Perspective

The follies of the Alaska Chamber’s oil tax position

I tend to become frustrated when I read articles that are short on facts and/or long on buzz words. So I was when I read a recent article by the Alaska Chamber (Daily News-Miner, Aug. 15), which was both short on facts and long on buzz words.

Having been self-employed for many decades, I recognize that being in business involves risk.

The article’s language: “this kind of tax increase” was both without facts and clearly intended to be triggering buzz words. That was then combined with the over-the-top and unsupported: “investors to look to more stable areas….” This type of writing shows the author was not interested in facts or logic. What the Chamber presented was an effort to exploit by fear.

No alternative oil region or more stable area to which oil companies would flee was identified by the Chamber. No acceptable revenue system in its unidentified jurisdiction is compared. But, let’s say its Texas, which produces about 5 million barrels per day, compared to Alaska’s 500,000 barrels. The combination of revenue from royalty and production in Texas is about 30% of market price. Texas has had a 25% royalty, double Alaska’s, for many decades. Texas found that imposing a royalty double Alaska’s royalty had little to no impact on investment and throughput.

Alaska has a low royalty, about 12.5%. Modern Alaska was built with production revenue. Monies to Alaska from combined royalty and production streams should be about one-third of the monetary value of our resource. One-third is the original “deal” Alaska had with oil, according to Governor Hammond, who later complained Alaska was getting short-changed by oil when Alaska received “only” 27% of our resource value.

Alaska under Senate Bill 21 does not receive 30%, or 25%, or 20%, or 15%. Five years of net negative production revenue, after credits, is what Alaska received. Under SB21, Alaska is shortchanged.

It is no wonder Alaska was in recession starting 2015 when the full force and impact of SB21 was imposed upon Alaska’s revenue stream. It is no wonder the citizens of Alaska are worried about the loss of permanent fund dividends and the cuts to services. Alaskans are worrying that modern Alaska is disappearing.

Maybe I am too interested in facts, but I hope you sense why I was frustrated by the Alaska Chamber’s article. You want to do the best you can do when you vote. You want real information, not buzz words and hollowness.

Alaska’s revenue system should be designed to be fair across a wide spectrum of likely prices. Even now, Alaska oil prices have returned to $40s, with projection of pricing in the $50s in 2021 and forecasts into the $60s later in 2021. With the additional revenue under the Alaska’s Fair Share Act, Alaska will be better able to preserve and maintain a modern Alaska. Please reject the attempt by the Alaska Chamber to take advantage of the limited hours or few days when oil prices were $20 or lower due to demand destruction caused by COVID-19 and the flooding of America with Saudi Arabian oil.

Vote Yes on One for Alaska over the wide spectrum of likely prices.

The ballot box is the only chance Alaskans will have to achieve fairness. The Fair Share Act is a constitutional citizens initiative, and is the only solution on Alaska’s horizon. The Legislature had the right, under initiative law, to do as good or better in its session in 2020, but it refused to conduct substantive hearings. The Chamber knows this yet does not disclose this to you.

Another Alaska Chamber failure to disclose is the short on facts and long on buzz words statement that, “Recently, the state changed tax regimes…”. What is not disclosed by the Alaska Chamber is the fact the oil industry insisted on the change and wrote SB21 including the $8 per barrel credit that is destroying Alaska. The credit is a major reason Alaska had net negative production revenue from 2015 through 2019. Maybe primary voters held legislators accountable by voting out seven incumbents.

The revenue to Alaska under the Fair Share Act will stay in Alaska, which will help our economy. Passage will bring jobs to Alaska, through those revenues, by capital budget construction projects, by increasing our capacity to pay for essential services and also increased capacity to pay PFDs.

Alaskans should apply pressure by voting for receiving a fair share on our oil.

Vote yes on Ballot Measure 1. Give Alaska’s future a chance.

Joe Paskvan is retired after almost 40 years as an attorney in private practice. He is a former state senator who served as chairman of the Senate Resources Committee. He lives in Fairbanks.

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