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Majority Looking for Answers on Economic Impacts of Oil Tax

Caucus members question Gov’s Office on ACES effects on exploration/production

Friday, December 04, 2009, Anchorage, Alaska – 15 members of the State House Majority Caucus signed on to a letter delivered to the Governor’s Office today questioning the economic impacts of enactment of Alaska’s Clean & Equitable Share, or ACES, oil tax legislation.

The four-page letter presents nine questions to the administration concerning the tax package passed in 2007, covering topics ranging from state lease sales statistics and oil and gas employment numbers to requests for new drilling permits and rig counts. Majority members focus their letter on industry’s “mounting evidence that ACES may wind up doing more harm than good to future oil development. That possibility needs to be examined as quickly as possible,” they write.

“We think that there are some issues there with the ACES language and we’d like to get some clarifications on the rules so that we can determine if the legislation is working properly, or if we need to make changes,” House Speaker Mike Chenault, R-Nikiski, said. “We’re focusing on how it affects job opportunities and exploration opportunities today, versus when it was enacted.”

ACES passed during a special session of the 25th Alaska Legislature in Nov. 2007, and was signed into law a month later. The tax was claimed to offer stability to the state and industry on the gross (before deductions) value of oil, and carry a sliding scale to provide a leveling effect when oil prices fluctuated between extreme lows or highs; re-working the Petroleum Production Tax, or PPT, that was passed in 2006.

“My district in particular has been hit hard by job losses as a direct result of the actions of government,” House Resources Committee Co-Chair Craig Johnson, R-Anchorage, said. “It is critical that we identify the reasons the tax increases in ACES have stifled investment and correct those oversights as quickly as possible.”

“While we enjoyed the short-term bump to the state treasury, we need to focus on the long view in light of recent decisions coming from  the companies on the North Slope,” House Special Committee on Energy Co-Chair Charisse Millett, R-Anchorage, said. “It is clear that the oil and gas industry has changed the way they approach Alaska business decisions, and we need to make sure those long-term investments come back on track for future generations.”

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