Friday, September 21, 2012

Outside view of Alaska Senate races ...

For those with a subscription to highly respected national energy publication Energywire, reporter Margaret Kriz Hobson has written an interesting overall summary of the Alaska Senate races from an Outside perspective.  In a story in yesterday's edition entitled "State senators targeted in Alaska's oil tax fight," Hobson writes:
The November elections could mark a turning point in a raging political battle over oil taxes in Alaska, as production there continues to dramatically decline. Gov. Sean Parnell (R) wants voters to unseat several state senators who have blocked his proposals to slash the taxes that energy companies must pay when extracting oil from state lands. Parnell and three of the state's major oil companies -- BP PLC, ConocoPhillips Co. and Exxon Mobil Corp. -- advocate rolling back industry taxes by as much as $2 billion a year, which they argue will encourage oil and gas development on state lands.
The remainder of the article is available only to subscribers, but includes quotes that provide the range of perspectives gathered by Hobson.
"The Alaska tax structure is significantly higher than what you see in other states," said Bradford Keithley, an Anchorage attorney at Perkins Coie and co-head of the firm's oil and gas practice. "We've taxed the industry to the point that we have made the state less competitive for investments, and we're suffering the consequences."
But, revising ACES puts,
"[t]he whole future of the state ... at risk," said David Gottstein, head of an Anchorage investment firm ... "Don't get us wrong. We want to encourage the industry to explore for and produce our energy resources. We want them to make ample profits, but not more than they need to in order to make reasonable rates of return -- especially when it would imperil Alaska's fiscal future. ..."It's hard for people to imagine that a state that has $60 billion in the bank has serious problems, but for those of us who do long-range forecasting, it's not that complicated," Gottstein of Backbone explained.  "The key is that the $2 billion tax reduction represents a 25 to 30 percent cut in the revenue to the state of Alaska" he said. "It would immediately put us in a deficit mode. Instead of adding to our savings account, we would be immediately drawing it out."
On the other hand,
some conservatives want state lawmakers to offset the tax cuts by shrinking the state budget.  Keithley maintains that Alaska's declining oil production cannot continue to underwrite its growth in state services. "Our politicians should be talking about the need for budget reform," he said. "But not many of them are.'"