Brennan: Forget about raising oil taxes
By Tom Brennan |
Here is an important message for Sen. Bill Wielechowski and any other citizens who think Alaska should raise oil taxes to deal with the state’s fiscal crisis: Forget About It.
We would be stealing from our children, our grandchildren and all those who come after us.
Alaska made deals with the oil industry and agreed to a certain level of royalties and taxes, and the revenues from those have paid our bills for 50 years and more. Reneging on those commitments would send a signal that Alaskans can’t be trusted and will break their deals when things get tough.
There are many obvious problems with such behavior; the most important is the negative impact it would have on our partners. And that, in turn, would affect business decisions that are yet to be made, decisions on which Alaska’s future very much depends.
I’m not much on economics but I worked with senior level decision-makers in the Alaska oil industry for more than 30 years. I know a little about how they think and what influences their major decisions. And I can assure you that reneging on our commitments and dipping into our partners’ pockets will go a long way toward convincing them that Alaska is a bad place to do business.
Right now it’s a very good place for their investments. This state has very large oil and gas resources. Developing those for the benefit of our people has been a very successful venture for us and for the companies, and can continue to be that for years to come. But being successful in that area requires that we keep the commitments made on our behalf. We should welcome the investments and our pre-agreed share of the benefits, but it is very important that we exercise restraint in dealing with Alaska’s business partners.
In short, do not raise oil taxes. It would jeopardize our future and, perhaps even more important, the future of those who come behind us, those who will have to live with the decisions we make today.
Some very important developments lie ahead, developments that are likely to have a major positive development on our state finances. Notable among them are the major North Slope oil fields to be developed in the near future by ConocoPhillips. Those new fields are likely to increase throughput in the Trans Alaska Pipeline by something like 200,000 barrels a day. And many other companies are working on big projects that are expected to invest something like $10 billion in Alaska over the next five years and support thousands of jobs.
State revenues from those developments, revenues that will support our state government and all it does for perhaps several generations, are in the works.
The companies are not about to cancel those projects, but I can tell you with a lot of certainty that future decisions will not be readily made in Alaska’s favor if this state turns on its business partners and does something stupid like raising oil taxes.
So please, do yourself, your family and your fellow Alaskans a big favor and forget about raising taxes on our industry. We made the deals. Now let’s stick with them.