JUNEAU – Senator Wielechowski (D-Anchorage) introduced Senate Bill 206, repealing the per barrel tax credits established in 2014 under SB 21. Under current statute, a producer is eligible for up to $8 in tax deductions for each barrel of extracted oil depending on certain conditions, such as the market price of oil.

“Recent SEC filings show Alaska remains an extraordinarily profitable place for the oil industry. At the same time, North Slope jobs are declining, and Alaska’s oil revenues are at near historic lows. Yet these tax credits will drain away roughly $1 billion per year going forward,” said Sen. Wielechowski. “Alaskans should not have to sacrifice their Permanent Fund Dividends for any more unnecessary oil tax credits.”

Since the implementation of SB 21, oil companies have received approximately $1.6 billion in per barrel tax deductions, and that number is forecasted to increase dramatically in the coming years. This year, the Department of Revenue projects that the oil industry will take about $955 million in deductible tax credits.[xyz-ihs snippet=”Adsense-responsive”]”In the last three years, Alaska has seen an increase in oil production by only 30,000 barrels per day, whereas oil production has increased 2 million barrels per day in Texas and 500,000 barrels per day in North Dakota in recent years. Alaska’s per barrel tax breaks are not an incentive for increased production,” said Sen Wielechowski. “To those who say cutting these tax credits will impact oil production, Texas and North Dakota have oil tax and royalty systems that force oil companies to pay double and sometimes triple what ours does.”

Senate Bill 206 was referred to the Resources and Finance committees.

Source: State of Alaska