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Alaska's oil tax system bets it all on a nag

  • Author: Eric Treider
  • Updated: June 29, 2016
  • Published June 19, 2014

Imagine walking through the stables a week before the Kentucky Derby and an old trainer pulls you into a stall to look at a decrepit old mare. The grizzled guy grunts, "This is The Prudhoe Bay. Magnificent in her day! And I can make 'er win the derby if you gimme some money for an injection … steroids, stimulants and ferret urine. She may drop dead after the race but, by golly, she'll win, I garoonteee!"

Craving fast cash, you race to the bank, withdraw half your savings, give it to the trainer and on race day, bet the other half of your savings on The Prudhoe Bay, only to see her finish last. Furious, you charge down to the stables and instead of the old guy, a kid's taking care of the mare. He says that a week ago, the old trainer came into a bunch of money and decided to retire to Mexico.

The supporters of SB21 sold us just such a bill of goods. Based on Department of Revenue projections, we'll have to double or triple North Slope oil production in order to generate the same revenue we would be receiving under ACES, and there's no indication that oil producers are investing big bucks to ramp up production to these levels, nor would we want them to. North Slope oil is our oil, and we want this source of income to benefit our kids and maybe even their kids. Driving a well to produce as fast as possible reduces the total amount of oil you'll get out of the well. The field works the same way. Rather than pumping like crazy and having less to show for it, we need to find the sweet spot that produces the maximum, sustained tax benefits -- for us and our offspring. We need a tax structure that rewards performance, not one that simply gives the state's checking account PIN number to the oil companies.

Next to learning that there is no Santa, the most disturbing news Alaskans will ever hear is that if each family of four had to pay their share of the state budget, they'd have to write a check to Juneau for $72,000 every year. Few politicians have the courage to bring this up. Instead, they hope for another huge oil or mineral discovery. The gas pipeline may help, but it will never generate the kind of tax income oil has. We need to begin planning for a future of low or no oil now.

We must overturn SB21 and return to ACES. And instead of funding lavish office buildings for our legislators and giving huge tax credits to refineries who don't want or need them, or building expensive bridges to cities that don't exist and probably shouldn't exist, we need to begin investing in people. We need to invest in our children…their safety and their education and we need to do everything we possibly can to prevent them from becoming ensnared in drug and alcohol addiction. We need to invest in one another and in our communities to make them happier and more life-giving. And we need to generate good jobs that don't depend on tearing up everything that makes Alaska special.

Our experiment in corporate trickle-down economics has been a failure. Let's overturn SB21 and focus on people over profits. Our children are counting on us.

Eric Treider is running for Alaska Senate, District O. He's a semi-retired oilfield worker and gold miner. He and his wife Nelma live in Soldotna.

The views expressed here are the writer's own and are not necessarily endorsed by Alaska Dispatch News, which welcomes a broad range of viewpoints. To submit a piece for consideration, e-mail commentary(at)

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