The election filing deadline is over and we head into a campaign season and the joys of robocalls, outside money and baby kissing. There will be lots of promises. But really this election will come down to oil taxes.
There's a trillion dollars of oil left on the North Slope, and the oil companies are doing their darndest to get every penny. Their job is to make as much as they can for their shareholders. The problem for Alaskans is, the oil companies want to elect a bunch of rubber-stamp legislators who will sit across the bargaining table from them and give them whatever they want.
Shame on us if we let them.
In 1967, ARCO threatened to leave the North Slope. Gov. Wally Hickel told them, "You drill or I will... It is our land and our oil." They changed their minds and found the largest oil field in the history of North America.
How times have changed. Now, Gov. Zero and the House Republicans' motto is, "You drill or I will -- give you tens of billions of dollars in tax breaks to do what your leases already require you to do."
Since Gov. Hickel's days, the oil industry has strengthened its grip on Alaska politics. They've financed legislators willing to give up our oil for less than we should. There was "separate accounting", which Gov. Hammond later said was one of his biggest mistakes. Basically, the oil industry managed to convince our legislators to allow them to write off their bad investments and losses elsewhere on their Alaska taxes. Total loss to Alaskans: $60 billion.
There were years of tariff overcharges that led a judge to declare the state guilty of "inexcusable trustfulness." Total cost to Alaskans: $18 billion.
They managed to convince us to have a 0 percent production tax rate on most fields and a low, declining tax rate on legacy fields like Prudhoe and Kuparuk. The philosophy for decades: low or zero taxes would increase production, jobs and investment. Sound familiar? The result -- production dropped from 2 million barrels per day to 750,000. As oil prices tripled to record highs from 2000-2006, and with 15 of 19 fields paying zero production taxes, investment, jobs and oil production plummeted. All told, under this failed policy Alaska lost tens if not hundreds of billions of dollars.
Don't believe me? Norway has a Permanent Fund similar to ours, started 14 years after ours, and built on billions of barrels less oil. Granted, they don't have a federal share taken out, and all of their oil revenue goes into it. But still, our Permanent Fund is worth $42 billion. Norway's is worth $600 billion. How? Norway gets the maximum benefit for their oil - a constant tax rate of 78 percent. And development is booming.
How have the oil companies done this in Alaska? Remember Bill Allen and Veco? Remember when legislators were convicted of selling their votes for lower oil taxes? But they also do it in perfectly legal ways -- the industry has massive fundraisers for candidates willing to carry their water. With the Chamber of Commerce, the Support Industry Alliance, the Resource Development Council and talk radio, they've created an echo chamber to convince us that, although we're getting ripped off, it really is in our best interests. It's called the Stockholm Syndrome.
After telling us how we need to be more like the Lower 48, poor Conoco Phillips reported making $254 million in the entire L48. Unfortunately for them, they produced about the same amount of oil in Alaska, yet made $616 million in Alaska. Oops. Their net income per barrel of oil equivalent was $28.66 in Alaska, compared to $6.07 in the L48.
Despite millions in lobbying and advertising to convince Alaskans that black is white and ACES is busted, Senate hearings revealed that under ACES, jobs and investment are at all-time highs. The number of oil companies doing business in AK has increased by 250 percent. Exploration is strong, lease sales are strong. Oil companies have made over $30 billion in profits since ACES passed.
Those darned facts.
What to do now? If you can't win with the facts, change the Legislature! With a Republican Redistricting Board gerrymandering an unconstitutional new legislative map, a compliant Supreme Court and unlimited oil company money, they are hoping tax breaks will be on the way. And with that, Alaskans can say goodbye to billions more.
Senate candidates for the Grand Oil Party are lining up at the grand oil company trough. Geezer retreads Bob Bell and Bob Roses just had fundraisers with the head of Make Alaska a Banana Republic - the business group shilling for Big Oil. Where? The Petroleum Club, of course.
Will we let them win, or will we learn from our history?
Shannyn Moore can be heard weekdays from 6 to 9 p.m. on KOAN 1020 AM and 95.5 FM radio. Her weekly TV show can be seen Saturdays and Sundays at 3 p.m. statewide on ABC affiliate KYUR Anchorage, KATN Fairbanks and KJUD Juneau.
By Shannyn Moore
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