Shooting ourselves in the foot
Those seeking to increase the oil production tax on North Slope producers should take note: ConocoPhillips says it wants to sell pieces and parts of its Alaska projects, while holding onto its 36 percent share of Prudhoe Bay.
To invest $11 billion in new Alaska projects over the next 10 years – and that does not include the estimated $5 billion or so planned for the Willow project, the company says.
That, of course, is great news. It means jobs, increased business opportunities and income for the state. But not everybody gets it.
Vote Yes for Alaska’s Fair Share is a group that hopes to get its hoped-for production tax changes on the 2020 ballot. The changes it hopes voters will approve would wring perhaps $2 billion dollars more out of the producers for government spending. An initiative process is underway with the same narrative as always: We want more.
It is the latest of the anti-industry crowd’s incessant pushes to punish the industry and rivals Sarah Palin’s Alaska’s Clear and Equitable Share oil tax when it comes to bad ideas.
ACES contributed to a 90 percent marginal tax rate at higher oil prices. It was among the highest oil production tax rates in the world at the time. Even Democrats thought it needed to be tweaked and the Legislature finally fixed it because the state was suffering as other oil provinces around the world boomed.
It should be noted less oil was produced in each and every year the punitive and confiscatory ACES tax was in effect.
So, what will happen if the state siphons off another $2 billion from producers? The industry would do now what it did under ACES, simply shift its investments to a more friendly environment and, once again, Alaska would suffer.
Alaska needs the industry investment in new projects that will pump more oil into the trans-Alaska oil pipeline and it needs the attendant jobs and business for a healthy economy.
What it does not need is an additional $2 billion in taxes to feed government just as producers such as ConocoPhillips prepare for huge investments that will ripple through the economy for decades.
Talk about shooting ourselves in the foot.