Point-Counterpoint: Bell says rethink oil taxes and give Pebble process a chance

BY BOB BELLOctober 20, 2012 

Significant issues in this year's campaign are ACES taxes and Pebble mine.

OIL TAXES

First, let's look at ACES. There are TV ads saying it's our oil. Well, they are right it is our oil but there is an argument that in 1968 we sold the oil on the North Slope for $900 million, a 25 percent severance tax, 20 mills on facilities, 12.5 percent of the oil produced and a promise from the oil companies to put up the money and take the risks to find and produce the oil and gas.

The oil companies took that deal and invested billions of dollars in Alaska to get the oil to market and bring considerable wealth to Alaska and Alaskans. So what has happened since they made that investment?

First there was ELF (Economic Limit Factor). It was designed to trend down as production from a particular field went down. In 2005, the state was seeing a significant reduction in revenue due to reduced production from Prudhoe and Kuparuk, so they aggregated the ELF for all fields, in essence raising the tax paid by Prudhoe and Kuparuk. Then, in 2007, the state passed the Petroleum Profits Tax (PPT), which doubled the tax. Then ACES passed, which doubled the taxes again.

So is it too much? Are the taxes so high they are a disincentive to the oil companies to look for and produce more oil? I think there is a distinct possibility that may be the case. If we just look at the royalty oil (12.5 percent) and calculate Alaska's share, for every new million barrels that go in the pipeline Alaska gets $4 billion a year and any taxes we levy are in addition to that. We should be highly motivated to get them back to producing more oil. The West Sak oil field has more oil in it than Prudhoe Bay but it is too cold to pump. It will take a lot of money to figure how to produce that oil. How do we incentivize the oil industry to make that effort? Maybe a better tax environment would help.

If we can fill the pipeline, we all win, so let's work together and figure out how to do that.

 

PEBBLE

The debate on Pebble mine is, will this project put the Bristol Bay fishery at risk. There have been TV ads from both sides appealing to people's emotions.

I am an engineer and I make decisions on facts, not emotion.

The federal government and Alaska have excellent permitting staffs with a great record in evaluating mining projects. We should allow them to do their job and determine if there is a substantial risk with this project or not.

If the mine can coexist with the fishery, then it is a win-win with great jobs for a part of the state that really needs jobs in both mining and fishing.

If it is too risky for the fishery, the mine shouldn't go ahead.

We would set a very dangerous precedent to deny this project without going through the permitting process. Resource companies would be hard-pressed to spend any money exploring in Alaska in those circumstances. Do we say Alaska is closed for business in regard to resource development?

The Bristol Bay fishery is a very valuable asset to the state for both economic and cultural reasons and it should be protected from actual threats but not from perceived threats. The permitting process will determine which it is.

 

CANDIDATE'S CHOICE

Issues in regard to West Anchorage would include upgrading West Dimond and Kincaid roads, airport noise, finishing improvements at Kincaid Park and getting Kulis facilities rented.

 

 


Bob Bell, a former Anchorage Assemblyman and longtime engineer and businessman, is the Republican candidate for Senate District J, West Anchorage.

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