Wednesday, June 7, 2023
HomeColumnsRick Whitbeck: Senate Bill 114 is reactionary, anti-energy, and anti-Alaska economy

Rick Whitbeck: Senate Bill 114 is reactionary, anti-energy, and anti-Alaska economy

By RICK WHITBECK | POWER THE FUTURE

Same song, different day. Alaska’s legislators are about to overhaul the state’s oil tax laws based on the worst government policy known to man: the need for more spending money. 

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We would like to think our elected officials set policy targeting Alaska’s most important private sector industry based on what would lead to more oil production, more investment dollars coming into the state, or what would ensure the energy security of most of the state’s population. Now, the policy being considered in the State Senate appears to be nothing more than a cash grab. 

Anti-oil legislators have consistently cried about how the State could be getting more from producers, and over the years, have introduced bills to increase government’s portion. 

This year’s iteration – Senate Bill 114 – is reactionary, over-the-top legislation, as not only does it substantially increase costs for the various oil producers and change the way fields are looked at from an accounting standpoint, but it would change the tax status for a number of Alaska’s small producers, as well as one of its two majors.

That change, where “S-corporations” would pay the same amount of income tax as the “C-corporations” doing business in Alaska, would supposedly raise $100-200 million annually.

Sounds rational, right? Ah, but as we all know, the devil is ALWAYS in the details. So, let’s look at what those millions might really cost us Alaskans.

Increased costs have proved time after time to lower investment, risk jobs and actually bring in less revenue in previous tax schemes. In this case, we are certain history will repeat itself, and Alaska will once again face accelerated decline in the Trans Alaska Pipeline, which is good for no one besides extreme environmental activists.  

But here is the punchline that should scare us the most: The instability associated with changing tax structures will be felt most heavily in Cook Inlet, which already faces fights from environmental zealots looking to thwart leasing and exploration activities in an area that produces much of Southcentral Alaska’s natural gas, which is used for both heat and power for residents and businesses.

Alaska’s utilities have already said publicly they are anxious about where to get their energy in the next ten years; without serious new investment in Cook Inlet, the “old faithful” oil basin that has kept energy costs relatively cheap in Southcentral for decades won’t be able to meet demand.

So, the Alaska Legislature has some explaining to do about why its members think enacting a huge new tax on the Inlet’s largest natural gas producer will help that situation. It is not complicated, and not hard to see how disastrous such a policy would be for natural gas consumers, who will see energy bills spike when gas runs low and gaps must be filled with crazy-expensive alternatives like imported LNG. 

Here’s a better idea: Instead of asking current companies to pay more, Alaska should be helping grow the number of producers by creating a stable, win-win environment that grows the overall barrels of oil and cubic feet of gas, rather than threatens their production.

With 25 percent of Alaska’s private-sector employment directly or indirectly tied to oil and gas development, anything that threatens production and future investment also threatens jobs.  If jobs go away, the consistent outmigration from Alaska to more stable resource environments will continue, and those jobs and families who leave take with them philanthropic activity, community involvement and begin to shred the fabric they helped create throughout the Great Land.

With this much risk, and such little potential gain, it is amazing the Legislature hasn’t rejected outright this year’s legislation. 

There’s still time to send a message that Alaska is going to continue to be fully open for business, that economic stability is more important than budget gluttony, and that SB 114 would be horrible for Alaska.

Rick Whitbeck is the Alaska State Director for Power The Future, a national nonprofit organization that advocates for American energy jobs and opportunities. Contact him at [email protected] and follow him on Twitter @PTFAlaska.

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18 COMMENTS

  1. You can’t argue with Rick’s logic here.
    .
    Sadly, all the statists and radical leftists in the Alaska legislature were long ago inoculated against logic, reason and facts, with the so-called “woke” agenda providing additional and all-too-effective boosters to their immunity against reality.

  2. Ask Yourself … “If you had a contract with another entity for said Terms & Conditions, would you think its fair and equitable to be forced to accept changing Terms & Conditions at a later date?” I’m guessing that you might not think this to be a fair relationship and, might consider termination – divorce for cause.

    Be rational and try to put yourself in the other Parties Shoes.

  3. As soon as we get Trump re-elected next year, holes will be drilled, oil will be pumped, the pipeline will be filled, gas vehicles will resurge, and climate activists will be crushed and sent to the trash heap of history where they belong. The largest fraud chapter ever committed against Americans.

  4. Let’s have the politicians cut their wages and perks. They keep moving to goal line on taxes that’s why we don’t need state taxes because they will lie and change the rate to get more of Alaskans money. Cut the wasteful state spending first .

  5. Its no wonder we have more depression in our youth. Look what future, or lack thereof, this legislature is leaving the next generation.
    The current, and far too many past, politicians (this includes ALL their staff) at EVERY level of government (city, state and federal) work really hard to ensure our destruction. It is obvious if you look up and stop believing that mainstream media machine that lies to us all.
    No jobs for millions of citizens only work visa workers, no border, no gas, no electricity, eat bugs, pedophiles are youth oriented attracted, irs is hiring 87,000 armed irs agents, doj is working to take away our first and second amendments rights….
    Start telling the truth and only the truth. All of us, demand truth, aleays. Lets start there.
    What is the end goal? The end of fossil fuels, think on that.

    • The end goal is driving the population back into pre-industrial standards of living. Except for our”betters” i.e. democrats

  6. One of the greatest weaknesses of humanity is its tendency to want something without providing anything in return. Ostensibly, government exists under the theory it is providing services in return for the taxes it collects. Examples are national defense, public water and sewer utilities, roads and highways, schools, etc. When taxes go beyond the minimum needed, they become purely parasitic and thereby a negative effect on the common good. That is clearly obvious when it comes to the over-taxation of oil production.

  7. What do you expect when voters send someone like Dunbar to the legislature? Add to that the useless Claman, who still brags about being the architect of the disastrous pro-crime bill that had to be repealed.

  8. Here’s the caption the GLOBALIST-MARXISTS WANT… supported by SPEND-THRIFT ALASKA LEGISLATOR’S

    HEADLINE!: Trans-Alaska-Pipeline System SHUT-DOWN, Abandonment of Project to begin immediately.

    It could happen anytime now. What will the Alaska Government do then? How will your homes be heated? Why won’t Alaska Governance use VISION AND TENACITY to develop ALASKA Resources for ALASKANS PROSPERITY? The Globalists are planning to take the resources from our ground when they take control.

    I was an environmental coordinator for ARCO for many years implementing environmental compliance management systems and training. When I left the “oil patch”, I used to tell folks, “I’ll be around to turn off the lights and lock the gates”. I’m retracting that statement…I will not go quietly into that dark night now.
    NATIONAL SECURITY STARTS or ENDS HERE IN ALASKA!!!. ALASKA’S RESOURCES ARE VITAL, AND WE HAVE THE TECHNOLOGY AND EXPERIENCE, but will need Emergency Orders, War Powers Act, or the like to expedite the work and success over the next decade.
    1). New Refinery for Alaska Fuels – Build a new facility to refine Alaska’s Royalty Share Oil in Fairbanks;
    2). New Railroad extension from Fairbanks to Norton Peninsula to haul fuel and goods to the bush and back;
    3). New Deepwater Port on Norton Peninsula with new railroad extension for Pacific Rim export and trade;
    4). New Pipelines – Fairbanks to Anchorage for refined products; Gas Pipeline from North Slope to Fairbanks;
    5). Magnetic Levitation Train – Elevated Track from Fairbanks to Homer for high-speed interstate transport.
    It will take decades to get these projects completed, It’s a plan for our children’s future, we know how to build and do these things, and it will require many new Alaskans to complete this critical plan.
    NATIONAL SECURITY…ALASKAN PROSPERITY FOR ALASKANS,,, NOW and IN THE FUTURE!

    • Sir, I like how you are thinking! Visionary plan, replete with a recipe for about the only realistic way to make it happen.

      Let’s make it happen.

  9. Alaska gets less for its oil than any other jurisdiction. Because we are giving away billions of dollars of our oil, AND paying hundreds of millions every year in corporate welfare, Alaskans are losing their shirts. Each Alaskan has already lost over $10,000 to smaller dividends. Now some, like Dunleavy, want us to pay a sales tax so we can continue to subsidize corporate welfare to Big Oil. Simple ending some of the corporate welfare we pay out each year will close our budget deficits.

    We need to spend less. One way to do that is end corporate welfare. By the way, the corporate welfare we pay out for new investment is largely NOT spent here. Madness.

  10. Agree on “we need to spend less.” Elaborating on your statement “Alaska gets less for its oil than any other jurisdiction”. Oil pricing is not widely known by the public, just the per barrel price, so the State or Feds can make a living expanding government control (e.g.: Alaska has ended logging, fishing, and other revenue development, leaving only taxes, spending will not be cut). ALASKA has the highest oil transportation cost/Bbl to market; it affects the value of our “petroleum hydrocarbons”, or strands large supplies not economic to develop for investors. A process called “Quality Bank” is used when oil is offered for transport to the Trans-Alaska Pipeline. A sample of the oil offered for sale and transport is analyzed against standards for world market value and sets the price payed. “Sales crude” is measured for quality, content, and value. Alaska crude oil is great, but less valuable than “West Texas Sweet”, or “Saudi-light” crude oils. (less impurities than dirtier Venezuelan crude). Add to that, apparently “ACES” (Alaska’s Clear and Equitable Share) was just another of the dozens of tax regulation and structure changes to kill the “petroleum hydrocarbon industry” in ALASKA. Kill the goose, while gathering golden eggs? – brought to you by the ALASKA Legislature’s “binding caucus” of totalitarianism, in buildings with heat, lights, and comfort – many are total hypocrites’.

  11. 114 is a deliberate attempt to drive the oil companies out of Alaska.

    For those of you who are old enough to remember, pre pipeline days were not milk and honey.

    We used to tell people if you don’t have a job, don’t come. Now we’re gonna tell people, if you’re not on the federal or state teat, leave.

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