Thomas Pyle: Make no mistake, higher taxes on oil industry undermines Alaska’s energy future

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North Slope work. Photo credit: Rob Bussell

By THOMAS PYLE

The North Slope is once again booming with activity. Producers are investing billions and introducing new technologies to maximize production from legacy fields like Prudhoe Bay and develop major new oil fields such as Willow and Pikka. Despite four challenging years under the previous federal administration, this energy renaissance has been made possible by a steady tax regime in Alaska that has allowed producers to engage in long-term planning and make substantial long-term investments.

Unfortunately, where many see success and opportunity for new growth, some politicians in Juneau see only an ill-advised opportunity to increase taxes. A legislative proposal currently making its way through the Alaska Legislature, Senate Bill 112, takes direct aim at Alaska’s energy producers by rolling back competitive policies to maximize production. If passed, this proposal would jeopardize investments on the North Slope and take hundreds of millions of dollars away from the projects that promise to strengthen Alaska’s energy future and economy.

Another tax increase making its way through the Legislature, Senate Bill 92, targeting independently owned oil and gas companies, such as Hilcorp, despite them making substantial investments in Prudhoe Bay, Milne Point, and in the Cook Inlet while others were pulling back and leaving the state. Even after SB92’s primary sponsor withdrew their support, this bill continues to loom as a threat to Alaska’s business and investment climate.

While addressing the state’s budget challenges is necessary, targeting the oil and gas industry—the very sector driving economic growth—is counterproductive and shortsighted.

Alaska’s oil tax structure, which generates significant revenues in the form of property taxes, royalty payments, and production taxes, has been crafted to encourage production and growth. Industry experts have made it clear –– it is simply unrealistic to expect North Slope operators to absorb hundreds of millions in new taxes without impacting investment.

The timing couldn’t be worse. Alaska is competing globally for energy dollars in an environment where money flows to areas that offer the most favorable investment environment. Other states like Texas and North Dakota already offer more competitive tax structures on a product that is easier to get out of the ground. Adding new tax burdens would diminish Alaska’s appeal at a critical moment when federal policies under President Trump’s administration are finally becoming more favorable for domestic energy production.

With opportunities for new LNG exports to East Asian markets through renewed support for the $44 billion Alaska LNG pipeline project, this is precisely when Alaska should be strengthening its position as an energy leader, not undermining it. Alaska has an opportunity to be the driving engine behind President Trump’s energy dominance agenda.

Production on the North Slope is projected to increase from 466,000 barrels per day to 643,000 barrels over the next nine years—a direct result of the stable tax environment that has encouraged investment. Major developments like the Willow and Pikka fields represent billions in new investment that will generate substantial revenue without changing tax rates.

Alaskans understand this reality, which is why they have repeatedly rejected oil tax increases at the ballot box. In 2020, voters soundly defeated a ballot initiative to raise taxes on legacy oil fields by more than 15 percentage points— affirming Alaskans’ long standing desire for increased production and a robust economy.

Many in the Legislature understand this too. As a unified group of lawmakers recently put it in an op-ed, “Today, we face a critical decision: embrace new investment opportunities that promise economic growth, or push them away with misguided tax increases that threaten Alaska’s future.”

Despite this clarity by some lawmakers in Juneau, others continue to advance major tax proposals aimed squarely at Alaska’s most important industry. Instead of expanding the economic pie, these efforts focus on extracting more from the very companies that are creating jobs, investing in communities, and driving long-term economic growth.

With enormous optimism on the horizon, Alaska’s energy sector needs stability and certainty. Fiscal sustainability will come from growing the economy—not shrinking it with misguided tax hikes that undermine momentum and discourage investment.

Thomas Pyle is the President of the American Energy Alliance.

9 COMMENTS

  1. There is an alliance between those with greed and the climate change cult. Tax, tax, tax or we’ll all die in two years. It’s kept our pipeline underutilized for years.

  2. Do you know who will second that motion?
    Ask Mich., namely, Flint, Michigan. How demanding your fair share from the automobile manufacturers worked out for them

  3. Maybe more legislature members should experience new taxes AFTER they take office. Nothing like tariffing ourselves! It’s not cold in Texas. It’s cheaper and easier to produce there. Let’s not make the oil company’s decision where to go easier.

  4. Interesting to note that the oil production on the NorthSlope is going to double in the next 48 months with the new fields coming on line . So more royalty taxes will be coming into the treasury . Why would the legislature want to increase taxes ? They are misinformed is why . Oil industry has done a very poor job of explaining the production is going to double . Maybe in fear that the lackeys in Juneau would raise the production taxes . Oh and by the way no production taxes if any are coming from Willow as our US senators decided to give the state royalties to the federal Govt . This was a huge mistake by Frank and Ted . You guys really screwed this up . Very poor agreement . Like any agreement , it should have had a non performance clause . This is if the ANWR or NPRA oil did not get to market . This was done thirty years ago and yet have they produced one drop of oil . This agreement our two senators signed was to facilitate oil getting to market . Still has not happened . Terrible agreement . Should be repealed .

  5. Where oh where is Sarah Palin and her cronies when the legislative fools need tutoring on how to decimate the oil industry now that we have some common sense in DC.
    It is now up to time to jump on Willykowski’s battleship and sink the titanic with taxes.

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