4-22-12 - Alaska's Legislature Is Making A Big Mistake
Today, we are pleased to provide you with a link to Tom Brennan's important commentary... embellished a bit with our own. -Dave Harbour, Publisher, Northern Gas Pipelines
Commentary: Tom Brennan's (NGP Photo) commentary below, notes that the Alaska Legislature seems enamored with providing tax credits to companies that explore new, potential petroleum reservoirs on Alaska state lands (i.e. most 'explorers' are relatively new to Alaska and have expressed publicly or privately a concern that if they do discover anything, production in this tax climate will be difficult or impossible). State law provides subsidies for explorers by over taxing the so-called legacy producers, the three large oil companies, whose risk and diligence caused Alaska to benefit so greatly from Alaska North Slope production. The short-sightedness of the Legislature's oil wealth redistribution is exposed below, when Brennan points out the significant new production that the three major producers (i.e. and the state) could monetize from existing reservoirs. We concur that the Trans Alaska Pipeline System (TAPS) throughput could be sustained for many decades were the tax and investment climate in Alaska to be fully competitive with other oil producing areas--and not among the worst taxing regimes in the free world. Governor Sean Parnell (NGP Photo) has exercised his leadership and recommended tax reform to the Alaska State Senate, which republican and democrat leaders continue to vigorously oppose.
Alaska also has serious challenges with the Federal Government's bending, breaking, abusing the rule of law whenever possible to delay and stop reasonable and traditional natural resource development in Alaska on federal lands. Governor Sean Parnell and his Attorney General have consistently opposed federal overreach via public comment periods, defensive lawsuits and through use of the "bully pulpit". Brennan's book, Snowflake Rebellion, anticipates a day in which Alaskans rebel against federal oppression.
While a Snowflake Rebellion might save Alaska from its federal masters in Washington, it will take a different sort of rebellion to save Alaska from its own, elected leaders. The first rebellion could be thought of as an "us vs. them" conflict, as in colonial days. The second rebellion would more closely resemble a civil conflict, as in President Lincoln's day. Both the state and the federal challenges require the honest analysis, courage and decisive action of citizens to overcome. -dh
Anchorage Daily Planet by Tom Brennan (NGP Photo). Any legislator who votes to provide ACES tax relief to companies making new North Slope discoveries - but deny it to the legacy field owners - owes the Alaska public an explanation. This state and its people have a lot at stake in the dispute. The legacy fields are Alaska's heritage, the heart of any future economy. The fields still contain an estimated 4 billion barrels of recoverable oil. The current value of that oil at $120 a barrel is $480 billion. The state's royalty share alone - not counting its tax take - comes to about $85 billion, twice the size of the Alaska Permanent Fund. State taxes of various kinds would reap many billions more. The state’s tax grab involves esoteric numbers like net profit so I can’t calculate that. But it is safe to say that the total, including royalties, would double or triple that $85 billion. For reasons that have not been explained, many legislators refuse to pass legislation that would encourage full and prompt development of that resource. They simply say the lower taxes could reduce the state's immediate take by a billion or two a year. (More....)
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Posted: April 22, 2012