In an unexpected move, Alaska's Governor Parnell removed the Oil and Gas Production taxes from consideration by the Alaska Legislature during this current Special Session.

Up until yesterday, the subject of the oil and gas tax looked as if it was going to be the hottest topic of the special session. No one on either side of the aisle expected this move by the Governor, especially at such an early date in the session. The Governor had advocated for large cuts in taxes to producers of existing fields.

The House was expected to go reluctantly with the Governor on his plan to slash taxes to oil producers by $1.7 billion to $2 billion a year, but the Senate was lined up against the Governor in what looked to be a protracted fight in Juneau.

It was thought by many in the Capitol that Parnell hadn’t explained thoroughly enough why the oil companies needed these cuts to their tax obligations, especially when the big three companies wouldn’t give any concrete guarantees for more oil production in exchange for an easing of their tax burden. Many in Juneau pointed to the near record profits that Conoco posted this week as a reason to not lower taxes on the oil companies.

In a statement yesterday, Governor Parnell said, “Stemming Alaska’s production decline and growing our economy through increased oil production is extremely important, both now and in the long term.” He went on to say, “But there are some in the Senate who believe that Alaska’s oil production decline is a myth. This is an irresponsible disregard for the facts and Alaskans deserve much better.

“Given the hardline position of some in the Senate against increasing production from both existing and new fields, the Senate appears incapable of passing comprehensive oil tax reform,” Governor Parnell said. “Accordingly, I am removing consideration of oil and gas taxes at this time.

“I want to thank the many Alaskans who fought for their jobs, future, and families, and who will continue to stand for maximizing Alaska’s resource for Alaskans rather than leaving it in the ground.”

After learning the news that the tax was off the table, House Democratic Leader Beth Kerttula said in a statement, “This is a good day for Alaska. I’m glad the governor just pulled the plug on his bad bill. The writing was on the wall when the governor introduced a bill that was nearly identical to his last giveaway. The facts have never supported giving away more of Alaska’s share, especially for nothing in return. I’m very proud of the House Democrats, and everyone else who worked against his oil tax giveaway.”

“I am stunned that the governor quit on his own special session so soon,” said Sen. Hollis French, an Anchorage Democrat who has been a leading opponent of the governor’s legislation. “We’ve learned too much and made too much progress to suddenly just have the rug pulled out from underneath us by an unhappy governor.”

To have the oil tax taken off of the table eight days into the session, may doom the tax cuts favored in the capitol for an easing of taxes to companies coming into the state to start pulling oil from new wells, earlier this month, the senate passed a bill to do just that. Now it is in doubt that this truncated version of Governor Parnell tax break will see the floor until next session.

This latest development now makes the Alaska Gasline legislation the only work left for the special session that is only now coming into its second week.