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Oil and gas industry hears plea to muster tax repeal opposition

Dermot Cole

The annual luncheon of the Alaska Oil and Gas Association took on the form of an opposition rally to the proposed oil tax repeal measure set for the August primary, complete with exhortations to vote "No on 1" in August.

Jack Gerard, president of the American Petroleum Institute, told hundreds of industry supporters at the Dena'ina Civic and Convention Center on Thursday that it's time to determine whether "Alaska is serious about providing the certainty and the predictability we need to encourage investments right here at home, to develop this vast resource you have."

"Our challenge coming up in August is to make sure everyone votes no on (Ballot Measure) 1,'" which would repeal the legislation known as SB 21, said Gerard.

"This could determine to a large extent the investment dollars that come to Alaska," he added.

Gerard, who lives in Virginia and works in Washington, D.C., said Alaska faces fierce competition. "The Australians would love to have this money, the Russians, the Middle East and everywhere else," he said. "There are some in the Lower 48 who are anxious to have these dollars."

"We need to make sure the policies right here at home in Alaska are set and this test in August will be an important one for us," he said. "So let's all make sure we get out and vote 'No on 1' and let's provide that opportunity, that future for all of us here."

AOGA, a lobby group for the oil industry, also took the occasion to release a new research report by the McDowell Group on the economic impact of the industry. Jim Calvin, senior economic analyst of the consulting company, said the primary oil and gas companies employ about 5,300 people in Alaska, about 4,700 of whom are Alaska residents. The total payroll for residents is about $780 million.

He said the companies spent about $5 billion with Alaska businesses last year and paid about $7 billion in taxes and royalties to state and local governments.

One way of looking at this, he said, is that 5,000 jobs in the oil industry provide the economic foundation for about 111,500 jobs across Alaska.

That includes about 50,000 jobs that derive from oil company spending and 60,000 that are connected in some way with taxes and royalties collected from oil. The combination represents about $6.4 billion in wages, nearly 40 percent of total wage and salary income in Alaska.

"I think this is the most telling image that we have from this research," he said, that one job with the primary companies leads to 20 jobs elsewhere in the economy -- nine jobs as a result of oil and gas company spending and 11 jobs as a result of taxes and royalties paid to government.

"It does seem to make sense to me that it's incumbent upon our state to take really good care of the one (job)," Calvin said. "Make sure that the one is healthy and well-fed and competitive because he's competing in an international marketplace."

Kara Moriarty, president of AOGA, said the primary vote is a crucial one for Alaska's future. "The governor (and) the Legislature got us back in the game about 13 months ago, and now we need to fight and vote no to keep us there," she said.

In response to the comments at the AOGA event, Vic Fischer, the leader of the repeal effort, said in a phone interview that the claim that approving the ballot measure will lead to a major loss of investment dollars is "pure nonsense."

"We want to have a tax law that is fair to Alaskans as well as to the producers. Insofar as ACES had problems, we want to fix those," said Fischer, one of the 55 people who wrote Alaska's constitution in 1955-56.

"Our goal is repeal of SB 21 and enactment of a new law that is fair to both the petroleum industry, which is indispensable to the future of Alaska, and that gives an adequate share to the people of Alaska, which SB 21 does not," he said. "We want to make sure that when the oil price is high that Alaskans get the benefit of that as well as the industry. SB 21 does not do that."


By DERMOT COLE
dermot@alaskadispatch.com