Not all that ‘gigantic’ after all
Alaska House Democrats trying to find new and wondrous ways to jack up oil production taxes and plunge the state deeper into recession, were beside themselves after the announcement of North Slope oil company profits.
They took it as a sign from heaven. “The industry has money,” they seemed to say. “We want it.” If you will recall, Scott Kawasaki, D-Fairbanks, even described 2016 Alaska profits of $85 million by BP and $265 million by ConocoPhillips as “gigantic.”.
What they did not say it that they knew, or should have known, better.
BP Alaska President Janet Weiss sent out an email to BP retirees in which she emphatically said “the BP Alaska Region did lose money (negative cash flow) in 2016 to the tune of about $1 million a day (a loss of $358 million for the year). And, the entire Region had a net income loss of $184 million. How can this be when the BP Annual Report 20-F says that BPXA made $85 million net income?”
She noted the BP Alaska Region is made up of a several separate businesses. The $85 million net income reported to the SEC “only represents one piece of our Alaska business. It does not take into account the cost of operating both our pipeline business (TAPS) and our marine shipping business. The BPXA business is specifically broken out as a requirement of the Prudhoe Bay Royalty Trust which is traded on the New York Stock Exchange.”
She said “even in this low price environment, BP invested $1.8 billion in Alaska ($1.2 billion operating expense, and $600 million capital) in 2016 and we paid $464 million in taxes and royalties to the state of Alaska.”
How is it that Alaska Democrats in the House, knowing all that, can justify raising taxes on the industry, causing further losses that will only trickle out into the economy?
It is easy to understand the urge to turn to the industry to help close the $3 billion state revenue gap. But instead of trying to pluck the golden goose, it would make more sense to work with the industry to increase oil production, the only light at the end of the revenue tunnel, at least until oil prices can recover from a worldwide glut.
What House Democrats want to do is simply self-defeating.