Archive for the ‘Proposition 1’ Tag

What Happens If Proposition 1 Passes?   Leave a comment

The Vote No crowd has outspent the Yes group by a factor of 8:1, but the polls show Prop 1 may still pass. It’s hard to absolutely know. Polls in Alaska vary greatly and are skewed by a variety of factors.

However, if Proposition 1 passes, the State of Alaska goes back to the ACES “taxation” system. I use the quotation marks because it’s not really taxation as we think of taxation. It’s the equivalent of the resource extraction fee a Texas landowner gets from the lease of his land to the oil companies. The subsurface minerals of Alaska are owned by the people in common, administered by the State of Alaska. No other state has this arrangement. It’s socialist as hell and I don’t think it was a good idea, but it is the way that it is. I believe Congress required us to write our constitution that way so that the people of Alaska would never take an ownership role in the resources. They misjudged us in that, but our legislature must relearn the lesson that the resources belong to US and that WE do not owe the oil companies anything. Proposition 1 is the people schooling the Legislature in remembering who they work for and that isn’t the oil companies.

When … if … Proposition 1 passes, dogs will not start mating with cats, as the oil companies want us to believe. ACES will return. Because the price of oil per barrel is down, Alaska will actually collect less revenue than it did under SB21. Why is that a good thing?

It’s not … but it is. SB21 gives the oil companies a very good deal for a very long time. ACES gives them a less good deal for a lesser amount of time. ACES can be tweaked to require the oil companies to deliver new exploration and development or lose tax credits. It sends a message to the oil companies that the Legislature and the Governor do not work for them, that the oil belongs to the people and that we refuse to be taken for granted. It also gives us an opportunity to pull leases from companies that have been sitting on resources for decades and perhaps offer those leases to smaller, preferably Alaska based companies that will be more competitive.

What will the oil companies do?

Well, I guess that depends on how much they want to retain their control over the Alaska fields.

I predict a lot of grumbling, some shifts of leases to smaller competitor and then Exxon, BP and Shell will get on board with the new regime and things will improve. Production might even increase.

 

My Turn: Real facts on oil tax reform | Juneau Empire – Alaska’s Capital City Online Newspaper   Leave a comment

My Turn: Real facts on oil tax reform | Juneau Empire – Alaska’s Capital City Online Newspaper.

Tony Knowles was the governor of Alaska 20 years ago. Many of us didn’t consider him a good governor. He lost an election to Lisa Murkowski for Senate when most of us were still angry about her daddy appointing her to the position in the first place.

But he’s mostly right on this subject and anytime I agree with Tony Knowles on something is an event worth documenting.

Posted May 12, 2014 by aurorawatcherak in Alaska

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Yes on Measure 1 – Fairbanks Daily News-Miner: Letters To Editor   Leave a comment

Yes on Measure 1 – Fairbanks Daily News-Miner: Letters To Editor.

The attached letter counters Richard Wein’s argument with points I mostly accept … except for the point about diminishing resource.

I suspect the letter writer is not a geologist or a petroleum engineer. I’m not either, but I do know a few. The North Slope is a HUGE area. The Prudhoe Bay basin is but one oil reserve. Yes, it is starting to decline. But then there’s at least three other basins that (assuming geological conditions tell the truth) hold at least as much oil as Prudhoe Bay has provided over the last 30 years. We currently have permits for one of those basins if we can figure out the access.

I find that most of the people who favor Proposition 1 do so based on a shaky understanding of what is available to us from the North Slope.

Posted May 9, 2014 by aurorawatcherak in Alaska

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Alaska should vote no on Measure 1 – Fairbanks Daily News-Miner: Community Perspectives   Leave a comment

Alaska should vote no on Measure 1 – Fairbanks Daily News-Miner: Community Perspectives.

I go back and forth on this issue, which is why I am running this Community Perspective and the following letter to the editor that takes it apart.

I’m of two minds. As a fiscal conservative, I think that low taxes are a good idea, especially on businesses. However, Alaska is not a normal state because our state government owns the mineral rights under everybody’s property. The only way Alaskans get any benefit from OUR resources are through the sale of royalty oil (and gas, if we ever get any out of the ground) and taxes. If I find oil under my land, it belongs to the State and the State leases it the producers and without taxation it would pass out of the state without an “owner” deriving a benefit.

Think of the State of Alaska as Farmer Joe Smith in North Dakota or Texas, not as the State of Alaska. In many ways, it is a business entity. It’s very socialist, I don’t think it’s a good idea, but it’s what the federal government required of us to become a state and … there you have it.

So after decades of the oil companies getting the LOWEST TAXES IN THE WORLD, we finally got around to restructuring the tax system to what was known as ACES. ACES was a fair taxation system that lacked a key element — tax breaks for exploration and development of new fields. ACES was on par with other states for taxes and in line with what it costs producers in OPEC countries. Alaska raked in some good revenue for a few years, thanks to ACES. The oil companies punished us by slowing down production. In typical Alaska wimp tradition, our Legislature decided to scrap ACES and return to lower tax structure. We’re back to selling our resources for far less than they’re worth. I opposed that because the math said we’d quickly be in revenue freefall and like it or not, we own the oil collectively and we have a right to get paid for OUR resource.

But ….

The oil companies are showing some signs of developing new fields and new fields will mean more oil in the pipeline, more jobs for Alaskans, and more royalty oil for the State of Alaska corporation to sell.

And, uncertainty is the quickest way to drive away investment. Alaska is already nervous-making for capitalists because we are a socialist structure (like it or not), so the last thing we need to do is start acting in a capricious manner. Let’s hold the course for 3-5 years and see where it takes us. If it doesn’t work as Mr. Wein suggests it will, reinstate ACES with the addition of inducements to explore. I personally would like to see inducements that favor smaller, Alaskan-based companies, but that’s another topic.

So, as of today (I might feel differently tomorrow), I’m voting “no” on Proposition 1. Please read the article for a full discussion of the issues. I don’t wholly agree with Mr. Wein (no surprise there if you’re a regular reader), but his arguments are sound.

Voting ‘no’ will ensure a better long‐term future for us all – Mat-Su Valley Frontiersman: Spectrum   Leave a comment

Voting ‘no’ will ensure a better long‐term future for us all – Mat-Su Valley Frontiersman: Spectrum.

Posted April 21, 2014 by aurorawatcherak in Alaska

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