A 40+ page bill filed in the Alaska Senate is designed to close a loophole that Hilcorp has been able to take advantage of due to its corporate structure was filed today by Senate Rules.
SB 0114 is an act “establishing an income tax on certain entities producing or transporting oil or gas in the state; relating to the oil and gas production tax,” and has been referred only to the Senate Finance Committee, which means it is on the fast track.
The Alaska State budget is suffering from a shortfall in revenues due to the price of Alaska crude oil being lower than was anticipated by last year’s forecast.
The bill says that any entity that has a qualified taxable income of over $4 million in a tax year shall pay a tax of 9.4% of the qualified taxable income over that $4 million amount. There area number of other provisions in the lengthy bill, but it’s clear from the bill that it is targeting Hilcorp, which is an LLC corporation and thus is not covered by some of Alaska’s oil tax structure.
Hilcorp took over the running of Alaska’s major oil fields as BP Alaska exited the state. This story will be updated.
Hilcorp Alaska is an LLC
The 8 Senate “republicans” did this. They gave power to 9 democrats and the Rules chair is Sen Wielechowski who’s been after the oil companies for a very long time. No one to blame but those 8 republicans who wanted power at all costs. They got it. Unfortunately the costs for the rest of us and the private sector will be daunting.
Either the state annual budget must be reduced – real reductions as we keep trying smoke and mirrors, which don’t work – or else one or more cows will be slaughtered. No one in the Senate Majority favors cutting the budget. Even Public Broadcasting is a sacred cow to the Senate Finance Committee.
This Legislature wants to increase education spending substantially, and offer public employees a defined benefit retirement option.
Willow will give another $1.2 billion to the North Slope communities but there is still no move to take back the annual $400 million in state oil equipment property taxes that is automatically appropriated to the North Slope Borough every year. Dunleavy tried this his first year, and he had to fire Arduin for it.
The State Senate is a lost cause until after the next election, as it is filled with to many counter-productive Senators, but lets hope the speaker assigns it, in the House, to at least 4 committee referrals and it is never heard from again…
What makes you think next year will be different?
I genuinely don’t know why anyone bothers trying to get oil out of the ground here.
Between grandpa sniffy wanting to shut it all down and the legislature wanted to extort taxes from it, it’s not worth the trouble.
But of course you’re glad they do because it pays your PFD.
What are you babbling about?
Hush child. Grown ups are talking.
Hilcorp should just quit pumping oil for a week. This state drives company’s away because of the revolving door called oil taxes. The legislature cannot stand by a decision before changing it repeatedly.
Screwing with the tax structure has worked so well in the past. Remember when “Tax and Spend” Sarah Palin and her friends in the legislature rewrote the oil company taxes to get “our fair share” (I guess oil and gas paying 90% of the state’s budget for four decades isn’t “fair enough” for them). Now we don’t have BP, Exxon, Shell, Chevron or UNOCAL here anymore.
Keep wringing the neck of the golden goose guys. I’m sure it will end differently this time.
That’s ol Sarah’s speciality. Sneek around. Steal.
Too bad her fate will be the same as Trump…
The epitome of stupidity…. Death by a thousand stabs. What happens when the oil companies just finally give up on these fields due to the untenable tax environment? Who will pay for the state then?? The green weenies with their green energy projects? Good luck with that one. The North Slope oil production is and should continue to be considered as the most valuable asset that Alaska has. Keep stabbing lefties, see what’s left when you are done. You will all be out of a job. There will be no government budget to fight about since there will be no income. Go on now, keep it up and see if what you are pushing for is really what you want. To repeat a phrase one of my friends from Wisconsin always says – Effen IDIOTS!!
Justin, the epitome of stupidity is the fact that your baseless rant says nothing about how much revenue the state actually receives for the oil, and how much the oil companies make from the oil. Please provide the missing information so we can all compare it to the fact that elsewhere in the world, the oil companies make about $2 per barrel, plus costs, which information has been previously published here at MRAK. Then explain your opinion that the oil companies would leave Alaska if they make much more money here. Finally, if they would leave, explain why the state could not extract the oil and sell it directly, thereby eliminating the middle man and keeping the extra money.
Is Sarah Palin, with virulent hatred of oil companies, back in office in Juneau??
I’m not sure if the Legislature spends more time every year changing the oil tax structure, or arguing about the size of the PFD. It’s pretty close to a tie, with each one wasting far, far too much time and effort.
The end goal is this: Kill any carbon emitting extraction, which leads to the state finally getting 100% of the dividend AND an income tax. Maybe even a sales tax. It’s a win/win for leftists and the green agenda. Honestly, the sooner this happens the better. State population will decrease by about 40% or so.
Did it ever occur to anyone that the majors are leaving Alaska in part because of increasingly unfavorable economics, and that this loophole is a factor in Hillcorp being able to economically sustain operations? Duh!
Sadly, Alaska is proving to be a one-trick pony, draining increasingly-smaller oilfields and clamoring for more of them (Willow), while slowly and inexorably reverting back to what it was before Prudhoe bay was discovered.
The main difference now, however, is that the State’s Government and citizens are hooked on oil revenue and big PFDs. And as always, withdrawal from addiction is a very painful process.
Big oil is getting out of here for very simple reasons, none of which have anything to do with your PFD obsession.
Between the federal government and the Alaska legislature, with a very able assist from Queen Sarah, has made it a hostile place to conduct business.
We have enough oil and gas (plus coal) to make it lucrative for energy companies to be up here for 100 more years. They are not allowed to exploit the resources and don’t know from legislative session to session what lunacy they will be forced to work under.
Any sane business would do the same.
Interesting as BP and Exxon have become some of the biggest oil company’s in the world over the last 46 years . Common thread , North Slope oil production is where it all started . So when BP in the 21st century nets $1.00 per Barrell producing oil in the Middle East for the Arabs , all in producing North Slope crude , it’s estimated lift cost of $17 per barrel , shipping to refinery thru taps , $11 per barrel . Tax of 12.5% to state or less , at $75 per barrel , CP is netting $30 per barrel . Not fuzzy math !
If only. . . . We could modify SB to include:
“establishing an income tax on certain entities OPPOSING, producing or transporting oil or gas in the state. . . .”
Can we grant environmentalists the opportunity to pay taxes identical to oil companies? That’s a tax I could support!
Exempting environmentally organizations from the non-profit tax code has huge upside potential. They make lots of cashola, with very little investment, and almost no overhead, so they make pretty much pure profit, don’t they?) Taxing Enviro’s at a progressive rate tied to the price of oil, which they work very hard to increase. Just feels right, doesn’t it?
A suggestion for House Finance, certain to attract attention!
Great Idea if it Could be done. Sounds like they’d shut-up their big mouse traps. Charging the environmental orgs, they could be paying for all our schools etc, since we seem to be the target of spending our PFD on the schools. The problem with that, we spend $$(PFD) for schools and they use that $$ for teaching Woke and gender education. never for the Real educational standards.
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