BP’s tankers occasionally return to Valdez with millions of gallons of Alaskan oil on board, reports The San Francisco Chronicle, the Houston Chronicle, and the Fairbanks News Miner.

With Valdez holding tanks 90 percent full, tankers top-off and return again to West Coast refineries that are still too full to receive their loads, because BP’s refining and retail capacity is maxed. Clearly BP is prioritizing just-in-time delivery to meet the maximum market share and profitability of BP’s West Coast refined products.

Alaska’s oil has been BP’s cash cow since their subsidiary Sohio Petroleum became their face in Alaska, in 1970. Before acquiring ARCO in 2000, BP successfully asked Congress to lift the ban on the export of North Slope crude. If BP were truly interested in exporting crude today, tankers wouldn’t be returning to Valdez with oil on board. However, after acquiring ARCO’s West Coast refineries and retail stations, BP’s incentives changed to the more profitable business of refining and retailing.

In 1981, I was in the Legislature when the biggest tax break giveaway ever was voted on; — a tax system nicknamed ELF. Prior to voting, an oil lobbyist told me they were losing so much money on their Alaskan investments, they were considering shutting down and leaving. Sound familiar? Shortly after voting for ELF, I uncovered a well hidden letter to stockholders from Sohio’s president. He explained that Sohio was practically drowning in cash. The letter was written before we gave them their 1981 tax break. –– I copied the letter and distributed it to all legislators, and soon became the first political target of BP’s surrogate, VECO.

In the mid 1980’s it became obvious that other countries were getting far more for their oil than Alaska. Even countries with expensive deep water platforms were making more. Between 1980 and 2000, BP went from the 13th largest oil company in the world to the 3rd largest. They did it with profits that rightfully belonged to Alaska. Profits that would have built roads and fattened dividend checks had it not been for VECO’s bribery and fraudulent representations by oil lobbyists. Given the chance, a jury might find the oil companies owe Alaska a few billion dollars.

BP controls Alaskan crude from the well head to the gas pump. They take Alaska’s oil for the cost of production and transportation, plus local, state and federal taxes. BP’s crude costs add up to about 28 percent less than independent nonproducing refiners pay. The life of BP’s cash cow is extended by trickling Prudhoe’s production; and Governor Parnell’s tax cuts won’t change BP’s incentives.

Lease holders are legally obligated to produce on our time table — not theirs. When former-Governor Palin told Exxon to produce their Point Thompson lease “or get out,” Exxon got busy. Our previously lower tax didn’t incentivize Exxon to produce; and our new higher tax didn’t stop them when Palin threatened to take away their lease. BP will produce on our timetable only when BP hears the same clear message.

Doubt that BP would shut in production to blackmail Alaska for a lower tax rate? Consider this: On Sept. 21, 1999, the Anchorage Daily News reported BP’s promise to increase Kuparuk production by 150,000 barrels per day if they were successful in purchasing ARCO’s share. ARCO was the largest owner and therefore operator of Kuparuk. Six weeks later, November 6, 1999, the Anchorage Daily News reported that BP was no longer willing to increase Kuparuk production. BP’s promise raised the question “if that’s doable, why hasn’t it already happened?”

When two friends and I filed a lawsuit to prevent BP from gaining monopolistic control of Alaska’s oil, a man describing himself as an ARCO employee told me that the Kuparuk field’s production, which fueled ARCO’s West Coast refineries, was declining and no longer filled refinery needs. He explained that for seven years ARCO’s annual budget proposed increased production by drilling new holes. BP however owned 35 percent of the Kuparuk field and therefore, by Alaska law, had the right to veto ARCO’s proposed drilling. BP used its veto to disrupt ARCO’s cash flow with hopes of starving ARCO into selling. A BP insider later told me it was true and offered to testify, if subpoenaed.

Oil companies are telling voters that “Alaska’s taxes are the highest in North America.” The statement is false and those saying it know it’s false. According to the government of Mexico, Mexico has the highest oil tax in North American at 94 percent. According to the U.S. Department of Interior, Louisiana’s 85 percent tax on oil is the second highest. Third highest is the U.S. Government’s 79 percent tax on production coming from the U.S. waters in the Gulf of Mexico. Alaska is tied with Texas for fourth and fifth at 76 percent.

ConocoPhillips’ VP of Finance told KTUU-TV News Alaska’s tax was “one of the highest in the world.” She said it with full knowledge that ExxonMobil had just beaten ConocoPhillips in a bid to overhaul and produce Iraq’s West Qurna Phase 1 for an after tax net profit of merely $1.90 for each barrel. (Wall Street Journal, Jan. 18, 2010), While telling KTUU that untruth about unbearable Alaska oil taxes, ConocoPhillips was reporting to the Securities and Exchange Commission that they had made an after tax net profit of $28 per barrel from their Alaskan oil.

We at Citizens for Ethical Government believe selling Alaska’s commonly owned resources at substantially below their clear and definable value on the world market violates Alaska’s constitutional prohibition of squandering a state owned resource. It also violates well established fiduciary responsibilities, prudent investor rules, and public trust doctrines. If Parnell’s proposal becomes law, it needs to be litigated, and hard questions need to be asked under oath.

Ray Metcalfe is a former legislator, participant in the VECO investigation, and chairman of Citizens for Ethical Government.