Keep Alaska Competitive: Don’t pass SB 112, the new tax proposed on oil production

By KEEP ALASKA COMPETITIVE COALITION

Alaska’s North Slope is finally booming with activity and Alaska is in the midst of an oil production revitalization. Several veteran and newer industry producers have spent billions on maximizing oil and gas recovery from legacy fields like Prudhoe Bay and on developing new major oil fields to the west such as Willow and Pikka. 

In our view, the major reason Alaska is benefiting from these significant investments is that our oil and gas taxation system has remained stable for the past 12 years, giving the producers the tax predictability they need to make investment decisions. They already deal with the fluctuating price of oil,  the risk of finding and producing economically viable oil fields, and the challenges of transporting that oil to market. 

Why would we send a message to these companies who invest in our state that our tax policy is unstable and not competitive, thus adding to their list of risk factors? That is what SB 112 would do. Raising the production tax, as proposed in SB 112, is the wrong thing to do if we want to continue to encourage more exploration and development.

Alaskans have consistently said no to oil tax increases at the ballot box over the past 11 years. We have responsibly decided that attracting investment requires fair and competitive taxes. We understand that investment in oil production is critical to our economic future. 

Our current tax regime is the result of many years of work with detailed analysis by internationally recognized consultants and is working the way it was intended. 

Over the next five or so years, new production will bring significant new revenue to state and local governments and maintain the viability of the Trans Alaska pipeline further into the future.

Things are going well for us now, and the last thing we want is to reverse the momentum that got us here!

Please reject SB 112 to avoid the inevitable reduction of oil production and economic losses to our State. 

Joe Schierhorn is chairman of Northrim Bank and co-chairman of the Keep Alaska Competitive Coalition. Jim Jansen is chairman of Lynden and co-chairman of the Keep Alaska Competitive Coalition. The Keep Alaska Competitive Coalition is a broad-based group of Alaska Natives, unions, businesses and individuals who care about the economic future of the state and understand that Alaska’s future depends directly or indirectly on the economy created by a vibrant oil industry.