A fallacy in the logic that decreased oil production taxes in Alaska will result in increased oil production investment is the assumption that other states or countries competing for production investment will not lower their oil production taxes.
If I were an oil producer, I would ask for lower taxes in Alaska “to make Alaska more competitive.” If Alaska lowered its taxes, I would then ask Alaska’s competitors to lower their taxes to make them more competitive with Alaska. It’s a simple strategy of pitting oil field owners against each other.
On the other hand, as long as Alaska is able to lease oil fields on an open market, which it is, why lower the tax rate? Why not pit producers against each other and lease to the competent producer willing to pay the highest price for Alaska’s oil leases? Only when there is a lack of interest in bidding for Alaska’s oil leases should taxes should be lowered.
— Peter Jensen