Our view: Oil tax debate

That report has fired up renewed debate over Gov. Sean Parnell's bill to overhaul ACES (Alaska's Clear and Equitable Share) oil tax regime, sharply reduce the state's production taxes and sharply increase oil companies' profits, with the state giving up about $8 billion over five years for the promise of increased investment and production.

Parnell intends to press again for a bill in the next legislative session. The House passed a version of his bill last session. But the bill never came to a vote in the Senate, where skeptical members argued that they needed more information -- and more than promises in return for such a dramatic change in tax policy.

Proponents of the overhaul, including a coalition of businesses called Make Alaska Competitive, have argued that exploration and investment have dwindled on the North Slope and the production continues to fall, with a corresponding loss in jobs, pipeline flow and revenue to the state treasury. They argue that ACES is the culprit, especially with its progressive tax take as oil prices rise, which discourages more investment.

Opponents counter that ACES is working as intended, by coupling generous credits and incentives for exploration and investment with higher taxes as prices rise. The idea is that companies investing in Alaska will have a lower effective tax rate than those that take their profits out of state. ACES advocates argue that recent investments by independent companies and consortiums -- and one major, Repsol -- along with high Slope employment belie the notion that ACES discourages the industry.

As the debate goes on, Alaskans should keep these points in mind.

• It's Alaska's oil. The state's job is to get the most value it can from its resource for the benefit of all Alaskans. That's not a matter of discretion. That's in the state constitution. We need the producers to get that oil out of the ground and to market, and they need to profit, but Alaskans shouldn't lose sight of the fact that it's our resource.

• If Alaska cuts its tax take or sweetens incentives, Alaska must benefit. Producers repeatedly say they can't guarantee specific investments or exploration but are sure to invest more in Alaska with the promise of more profit at the production end. Alaska needs more than a promise.

• Hype doesn't help, because the sky is not falling. One thing that has become increasingly clear is that Alaska's North Slope is not about to fade into history as an oil province. If the Petroleum News drilling report tells us anything, it's that the industry sees a lively future here. The governor has set an ambitious goal of boosting pipeline volume to 1 million barrels a day. That's a lot, but as Natural Resources Commissioner Dan Sullivan points out, there's a lot of oil yet to produce.

• ACES isn't writ in stone. Certainly there's room for discussion about the progressivity of rates at the high end. If Alaska gains by modifying the ACES regime, then we should. But let's do so without panic and with all the information we can get.

BOTTOM LINE: Alaska lawmakers need to take a clear-eyed view on oil taxes and remember who they work for.