A billion dollars here. A billion dollars there. Whatever.
Is that a way to craft an oil bill for this state’s future? This week one of the architects of the Senate’s oil tax bill similar to the Governor’s version followed oil company testimony stating they wouldn’t guarantee new production if the bill passed – and you just can’t make this stuff up – by saying “It’s kind of a crapshoot”. Juneau Empire, March 17, 2013.
And at another point he complained that with oil companies saying the new bill might not lead to any significant new investment or oil production – just a roughly $1 to $2 billion giveaway of state revenue at likely future prices between $110 – $120 per barrel: “Look, dammit. We need something to hang our hat on.”
So, what was the oil company testimony?
Well, in 2011 I asked questions in the House Finance Committee that got BP Alaska and ExxonMobil to admit that under the Governor’s bill they would dono new exploration in new fields, and ConocoPhillips said nothing different. The only new development is Point Thompson which Exxon is developing because of a court settlement; and NPR-A which ConocoPhillips has moved to develop under current oil tax law.
And this year, they‘ve stated they may do little if anything more than they’ll do under current law in their existing fields to extend production or reverse their production declines. It’s like giving away money we need for savings, schools, energy projects, roads, and needed disability and suicide prevention services (which face an $8 million cut under the current version of the budget) for, well, sport.
You don’t give away the public’s resource for sport. Never. Ever. Unless you want the earthquake that will be caused by the great Governor Hammond (who was a friend and mentor of mine) rolling over in his grave.
Here’s what the oil companies have said. They’re not interested in new exploration in new fields, which we need (last year). And they may not be interested in materially expanded investment or production in existing fields (this year). This year’s statements have included: ConocoPhillip’s Bob Heinrich clarified that substantial investments his company said they’d make were not ones resulting from the new bill. He clarified that ConocoPhillips was referring to investments that would be made under ACES, even if no new bill passed. That March 14, 2013 Senate Finance committee testimony is linked here.
He then said, “At this point we are not in a place where we could say how much we would do differently if this bill passed.”
But BP Alaska must have known to at least consider fibbing to try to get their giveaway, right? Well, not this time. Damian Bilbao of BP Alaska testified: “[W]e don’t feel that [SB21] goes far enough to attract the type of meaningful investment that’s required to make the future look different from the last six or seven years.” Dan Seckers with ExxonMobil said it “does not make Alaska attractive enough.” The March 14, 2013 Senate Finance committee testimony is linked here.
So, not that company promises that they’ll do more if we give away our oil revenue are always trustworthy – they have a legal obligation to get taxes as low as possible. But when someone is offering them $1 to $2 billion a year in tax breaks, and they say that won’t get them to invest any more, it should take you back to the drawing board.
Soon we’ll talk more about some legislation we are working on. But with a Senate bill looming, and Senate GOP members pushing to get his bill through their chamber this week, maybe tomorrow, I thought you should know what’s happening on that front.
I am also calling on the Governor to let experts he has had on contract, but has not allowed to testify (because they’d likely undermine the validity of his oil tax proposals), to show up and testify. Even if everyone doesn’t agree with them, we should base our decision on the bill of the decade on full information, not just experts chosen by those who want to significantly roll back Alaska’s share of our oil revenue.
For a description of a bill that makes more sense, and requires new Alaska investment leading to production, as a condition for more reasonable tax breaks, here’s a link to a newsletter describing the bill I and others are pushing.
The current bill being considered by the Senate allows companies to take nearly $1 to $2 billion per year in state revenue, and spend it anywhere they want in the world. Can you say bad idea?
Let’s pass something that works, not something that makes us poor.