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My Turn: Be careful what you vote for | JE   1 comment

My Turn: Be careful what you vote for | Juneau Empire – Alaska’s Capital City Online Newspaper.

I guess this is as good as time as any to announce that I’ve changed my own position on Proposition 1. I was going to vote “No” because I support reduced taxes as a rule.

Sometimes a second look at things makes us question our presuppositions.

I’ve explained before that Alaska is an owner-state. The people of Alaska own their resources in common and the State of Alaska administers them for maximum benefit to the citizens of Alaska. At least, that’s what our constitution says. Think of Alaska as a corporation, the Legislature as the Board of Directors, the Governor as the CEO and the people as the shareholders.

If this were North Dakota, the oil companies would be negotiating with the landowners over a payment scheme. If this were Kuwait, the oil companies would be negotiating with the emirs over a payment scheme. Under ACES, the oil companies were paying about about the same revenues to the State of Alaska as they were paying to other landowners around the world, but they were making considerably higher profits. British Petroleum is not required to publish its profits statements because they are a multinational corporation, but Conoco Phillips is. We know from their statements that Alaska is considerably more profitable for them than their other American fields and somewhat more profitable than their overseas fields.

In other words, Alaska is still the golden goose that laid the golden egg, but we are told by Sean Parnell, a former oil company executive, that we are not and we believe it.

In 2009, BP won the right to produce Iraq’s largest oil field — Rumalila. The field was producing a little more than 900,000 barrels a day. Iraq pays BP for actual costs for managing the original production. The contract requires BP to raise daily production to make a profit. BP was the original developer of the Rumalia field. Iraq booted them in 1953 for taking too much of the profit. BP returned in 2003, asking to resume pumping for $4 a barrel and Iraq said no. Iraq was unwilling to pay BP $4 a barrel to produce the field. BP then counter-offered  for $2 a barrel (half the price) and Iraq agreed, but only on condition of increased production.

Under ACES, Alaska paid BP $28 a barrel. Under SB21, net profits are expected to be around $40 a barrel. But BP will not give us a promise of increased production. They claim that the North Slope is just too expensive to operate, but in fact, BP hasn’t spent a dime on Prudhoe Bay since 1977. Proceeds from BP’s then-52 percent ownership of leases repaid 100% of BP’s Prudhoe Bay investments by 1982. It’s been all profits since then.

BP Exploration Alaska collects the profits from Prudhoe Bay, reinvests as necessary to keep the field productive, pays Alaska a tiny fraction of the taxes it would pay for the same opportunity in any other country, and sends the rest to London.

In 2006, then-Governor Frank Murkowski pushed a tax-reduction plan through the Legislature, with VECO and other entities greasing the skids with bribes. We fired him as Governor and replaced him with Sarah Palin, who gave us ACES, instead. It was a fair taxation system lacking only a demand for new exploration and increased production. Now Sean Parnell comes through with SB21, that is essentially a carbon-copy of Murkowski’s plan. It will bankrupt the state within eight years and does not hold any demand for new exploration and increased production.

I’m voting yes on Prop 1. There is already a plan in place to replace SB21 with an ACES-like structure with that missing demand for new production.

Sometimes, a principle — like, lower taxes are good — is not always true in every situation. Alaska is a landowner, not just a government and as such, we should be treated with the respect due a landowner.

They’re our resources, and BP et al needs to pay us a fair price for them … like they do in Iraq and North Dakota.

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