Morning Headlamp - New S&P Analysis Tell Alaskans What they Already Know
Headlamp has been sounding this warning bell
Alaska, among other states, has slipped into recession after a sharp decline in commodity prices over the last 18 months caused tax revenues to plummet and job growth to stagnate, according to a financial analysis released Tuesday. "Initially, the downturn was felt in state finances," S&P analyst Gabe Petek said. "Now this has really spread throughout their economies and highlights the risk of a concentrated economic base." Headlamp has been sounding this warning bell for some time now. Placing further burdens on industries suffering from poor market conditions isn't a winning formula to lift Alaska out of this recession.
It remains to be seen what effect yesterday's decision by President Trump to revive plans for the Keystone XL and Dakota Access oil pipelines will have on state economies. Supporters say construction of the pipelines will create jobs, although it's unknown how many or for how long.
An unfortunate walk down memory lane… A bill addressing North Slope oil and gas tax credits — the state's program of incentivizing drilling in the Arctic — is expected to surface next month in the House Resources Committee. "I think that there will be a bill within about two weeks, and it will be a central focus of the committee for some time," said Rep. Andy Josephson, D-Anchorage and co-chairman of the committee. Under the state's previous system of subsidies, oil and gas producers earned more than $1 billion in tax credits — money now owed by the state to those companies. There's a catch: The state only has to pay a few tens of millions of dollars on that debt each year. It could pay more, but Gov. Bill Walker has vetoed extra payments every time the issue has come up.
The veto of credits has damaged Alaska's credibility substantially amongst the industry and investors. Last legislative session the Dept. of Revenue, while testifying on HB 247, noted that Alaska had received $61.1 billion from 2007-2015 in petroleum revenue, while at the same time paying out $2.1 billion in refundable tax credits. Major discoveries on the North Slope, and increased exploration activity in the midst of a price downturn, signals that SB 21 and the credit program has worked. Since the new House Majority is treading down the same path again, it's worth resurrecting this AJOC editorial on the issue of tax credits...
Silicon (Mat-Su) Valley. Alaska's Legislative Information Offices have had an increased social media presence since the beginning of the 30th Alaska Legislature. LIOs offer residents the chance to connect with elected state officials either in person or through distance delivery. However, two additional media tools also available through the LIO are the Facebook page, or through Twitter with the handle @AKlegislature.
U.S. liquefied natural gas (LNG) exporters have shifted their focus to Southern Europe from Asia as cold weather and problems with Algerian gas supply have driven Europe's gas prices higher.
Oil and gas subsidy debate, which sank budget deal last year, is poised to return
Peninsula Clarion, James Brooks, January 24, 2017
My Turn: Alaska's fiscal crisis is not just a math problem
Juneau Empire, Alexander Hoke, January 24, 2017
S&P: Downturn in energy production hits budgets in 6 states
Fairbanks Daily News Miner, Christina Cassidy, January 24, 2017
Alaska Legislative Information Offices Boost Their Social Media Presence
KXDF, Brandon Smith, January 24, 2017
US tax reforms could 'transform' global oil market: Goldman Sachs
CNBC, January 24, 2017
U.S. LNG exports shift to Europe from Asia
Reuters, January 24, 2017
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