Archive for the ‘SB 21’ 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.


Debunking the oil tax myth – Fairbanks Daily News-Miner: Community Perspectives   Leave a comment

Debunking the oil tax myth – Fairbanks Daily News-Miner: Community Perspectives.

I’ve said before that I don’t know how I feel about SB 21. I didn’t agree with it when it was passed by the Legislature, but I don’t agree with repealing it … at this time. Oil company production is picking up, probably for reasons having nothing to do with SB 21 (yet). Adding new taxes now might upset those plans … or not. We need a clear-eyed plan for the future, not a change-with-the-wind strategy.

Having passed SB 21, we need to stick with it for at least 3-5 years to see what happens, otherwise we’re being bad partners in business and that will harm our prospects in the future.

But I still don’t think SB 21 was the way to hand the lack of production by North Slope producers. The Legislature should have amended ACES to force the long-term lease sitters to produce and add an incentive for new development. SB 21 lowered taxes long-term and left development up to the producers. It wasn’t a good idea, but neither is changing the oil tax structure every year.

Posted May 19, 2014 by aurorawatcherak in Alaska

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