Hilcorp's purchase of BP properties on the North Slope is good news for Alaska. Hilcorp is doing a great job producing and exploring for gas in Cook Inlet, and we look forward to its positive contributions to oil and gas development on the Slope.
Backbone, the citizen's group that advocated on behalf of Alaska during the past decades, long held that the entry of smaller, independent oil companies would be good for the state. It is they that can be counted on to actively explore for new fields and bring online new production. So every new company up north is a boon to Alaska.
One thing that the backers of repealing the oil tax giveaway and the vote-no crowd agree upon is that oil development is good for Alaska. We are well acquainted with and value the economic, financial and quality-of-life benefits that industry activity provides to Alaska.
At the same time, we believe that Alaska's Constitution was not followed when legislators and the governor enacted the SB21 giveaway. Section 2 of Article 8 specifies that the state's natural resources shall be managed for the maximum benefit of the people. That was not done in this case.
SB21 reduced by billions of dollars the taxes that major producers pay to the state for our oil. They obtained this benefit without any commitment or obligation for future investment, exploration or production.
We are now bombarded by endless media advertising claiming massive new investments and jobs resulting from enactment of SB21. These assertions are not believable because multinational corporations don't change direction in a matter of months. They review worldwide situations and opportunities, and investments are years in the making.
Most of what's happening today was initiated during the previous oil tax regime, known as ACES. During that era, oil prices were high, producers made record profits, employment grew and more new companies conducted exploration. And Alaska balanced its budget and accumulated $17 billion in savings.
Now, because of SB21 and changes in the international price of oil, the state is looking at greatly reduced oil income, massive annual budget deficits, and multibillion dollar withdrawals from our savings accounts. There's even talk in Juneau that the fiscal crisis is putting the Permanent Fund "on the table." Certainly, none of that accrues to the benefit of Alaska's people.
The trouble with SB21 is that it was created by the current Legislature, which requires lockstep obedience and countenances no reasonable compromises. They rejected every amendment to provide for performance measures and accountability, regardless of whether proposed by Democrats or Republicans. A reasonable lawmaking process could easily have dealt with any valid criticism of ACES (such as excessive progressivity with high oil prices), protected constructive exploration incentives, and looked at modifying sensible tax rates when prices drop. That is still needed.
So we urge the people of Alaska to do the following:
1. Vote Yes to repeal the SB21 giveaway.
2. Elect leaders who will put Alaska first.
3. Pursue legislation that will assure that Alaska's oil and gas resources are managed for the maximum benefit of the people while also being fair to oil and gas producers.
Vic Fischer was a delegate to Alaska's Constitutional Convention, territorial representative, and state senator. He is director emeritus of UAA's Institute for Social and Economic Research and wrote "To Russia with Love: An Alaskan's Journey." Jack Roderick is author of "Crude Dreams, A Personal History of Oil and Politics in Alaska." He has served as mayor of Anchorage and was deputy commissioner of Alaska's Department of Natural Resources.
By VIC FISCHER and JACK RODERICK