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Myth-busting claims in Alaska's oil tax debate: Part 2Yesterday we began a two-part series about what we consider the most duplicitous oil-tax myths being perpetrated surrounding the oil-tax debate raging in Juneau. The first myth we chose to bust yesterday was the notion that the oil industry is always a good business partner. The second was that Alaska extracts an 80-90 percent tax on the oil industry. The third was about the comparisons of tax regimes in North Dakota and Alaska. We now present you with three more. Here’s a recap of the backstory: As part of his plan to get a million barrels of oil down the pipeline each year, Gov. Sean Parnell is calling on lawmakers to pass a bill that would lower taxes on the oil industry by about $2 billion a year. He says he has assurances that lower taxes mean higher production. He hasn’t, however, received firm commitments. Many throughout the state wonder why the governor is so willing to trust industry. His trust is all the more questionable considering the myths circulating around the debate, myths that those who know better have done little to quash. RELATED: Part I: Myth-busting claims in Alaska's oil tax debateAs we wrote yesterday, these myths spring from a dearth of hard data, data that Alaskans have been lacking since their dance with the oil industry began. Couple that with the confusing, often conflicting data that is presented, and you have fertile soil from which propaganda can grow like fireweed. Don’t get us wrong: We understand all the oil industry has done for Alaska -- meaning nearly everything. But that doesn't mean that we should believe everything they tell us. It doesn't mean that we shouldn't fact-check the propaganda. The six myths that we've chosen to examine are by no means a comprehensive list. But the heart of the argument to lower taxes seems to rest in no small part on these myths. Read on. When I came back to the US in 1972 from Germany I went to work for an oil company in Texas. We were just outside of houston drilling holes into saltdomes. One hole was in the very top and the other was in the lowest part of the dome. I was doing my job and didn't ask questions why. I did think it was strange after a few years. I did some research and found that the reason for drilling the salt domes was because the oil companies didn't have any more storage tanks to put the extra oil that was being produced....... hmmmmmmm really!!! I remembered living in Germany and only being able to get fuel with stamps and if your car plate was either odd or even only on those days you could buy fuel... 1972!!! I think there are a few that may be old enough to remember those days... Can you tell me why they had so much extra oil that they had to pump it back in the ground.... yep you guess right. We were drilling salt domes so they could put the oil back in the ground...1972!!! The first huge oil shortage scare!!! Remember... I just read the February 16 Alaska Dispatch Article "Conoco earned nearly $10 billion in profits since 2007 from Alaska oil." 10 billion since 2007 would be about 2 billion/ year, or about 5.5 million/ day, 228,000 dollars/ hr, 3800 dollars/ minute, and about 63 dollars/ second. For decades BigOil has bamboozled the State of Alaska & played on the good nature of our citizens. How anyone can ever trust BigOil or BigBusiness, including BigGovernment after so many outright fraudulent actions that have so negatively impacted the populace is beyond my comprehension. I would advise that we "Never Trust & AlwaysVerify". I think anyone truly interested in fact needs to read Halcro's analysis on this at his blog. His unemotional presentation of data is overwhelming. Hat tip to Andrew for doing the heavy lifting on this issue. Convert TAPS to a gasline.. google: horse manure crisis 100% of all hydrocarbons in ALASKA can be moved to in-state and export market much more efficiently when converted to light-alkanes. All petrochemical operations can be designed to produce very little waste heat and emissions.. Every carbon atom that has gone down TAPS since 1977 without being attached to at least 3.5 hydrogen atoms has been a waste of an expensive pipeline. Carbon works best as a hydrogen-carrier. Hydrogen is DC-electricity at rest.. [basic electrochemistry] Everything made from CRUDE can be made from GAS much more efficiently. Big Earl's CRUDE technology wastes over 50% of the BTU's between wellhead and consumer. 100% of CRUDE and COAL and GARBAGE and SEWAGE and BIOMASS can be gasified into hydrogen-rich alkanes using a combination of microwaves, plasma, nanotech, and electrolysis. http://peswiki.com/index.php/Directory ...pay careful attention, yes you can increase the total effective-value of Alaska's remaining hydrocarbons by more than 10-times your most optimistic estimates. ~~the other half of the global energy/econonutz crisis is how the consumer market utilizes the hydrocarbons we buy.. 99% of our gas-guzzlers are still wasting 85% of the energy we put into the fueltanks. Our transportation and architecture efficiency is very-very sucky!! Big-Govt bailed out Big-Auto with mega-billions of your hyperinflated dollars.. I pity Big Earl and Big Govt because they are braindamaged and hopelessly Stuck on Stupid. Great article, Alaska Dispatch. This is the kind of reporting people need to make democracy work, the kind that ferrets out the truth so the rest of us can make an informed decision at the ballot box. Thanks!! What I find disturbing was how quickly some House members supported HB110. After watching recent Senate finance and resource committee hearings on the matter information from industry and our own DOR is still hard to come by for the state to decide on ANY tax cuts. Clearly the big3 know what they r doing but DOR is clueless, by design or not, currently DOR can't tell heads from tales on oil taxes. The tax structures in this state since the beginning has been convoluted to the point they r unmanageable, to big3's benefit. Currently the big3 are-1. Purposely letting throughput decline 2. Using capital credits to modernize existing infrastructure 3. Waiting for the senate to turn over due to redistricting. End result- as soon as a bill is through the senate Mr spineless will veto it unless it is his. Next session new senators will fall in line, big3 gets what they want and will increase production that they would have regardless of tax cut. Big3 wins -Alaska gets crumbs. Yukon King wrote "Big3 wins -Alaska gets crumbs." Let me fix that for you: Big3 wins, Alaska gets the shaft. Well said. Thanks for your good work Amanda and Alex! I had wondered why the Alaska Dispatch was silent during the recent testimony before the Senate Resources Committee in Juneau. Now I know why. It takes a little longer to write a good, in-depth piece as apposed to a simple news article. I appreciate that you don't minimize the positive effect that the presence of big oil has had on the economy of Alaska. I am glad that they are here and continue to make a handsome profit. I have never contended that big oil is the enemy. Some of our politicians have been guilty of collusion with big oil over the past decades to the point that the FBI came in to break it up. The real enemy is Alaska's complacency and our oil company lobbyist/governor Sean Parnell. This article (part 1 and 2) is the first I have seen by an Alaskan news source that points out the facts ( with the exception of Dermot Cole's editorials in the Fairbanks Newsminer and Bill Walker's factual op eds). Keep up the good work and I wouldn't mind seeing a part 3 in this series. I don't disagree with anything Amanda wrote, but I ask 'is it relevant'? I want to know what resources are being developed - and has the pace of development slowed? It's one thing to say the pipeline will be there in 10, 20, or 30 years. But what I want to know is how much oil will be flowing through it and current and proposed tax rates. @ENTJ: Yours is also the question I want most answered. I have my suspicions on why production has slowed, but barring some sort of leak of an internal document, I won't be able to report them. Do keep in my however, that there's a lot of oil up there. And at some point, and to some people who understand the law, comparing Alaska to Angola to North Dakota, et al, should pointless exercise. The leases read that if there's a reasonable expectation of profit, they have a duty to produce. It doesn't matter how much more money they can make elsewhere. Thanks for your feedback, Let me make a correction/ clarification on my comment above. Only the new leases have the profit clause. The old ones, which include most of the North Slope leases, read like this: “This lease contemplates the reasonable development of said land for oil and gas as the facts may justify. Upon discovery of oil or gas in paying quantities on said land, Lessee shall drill such wells as a reasonably prudent operator would drill having due regard for the interests of the Lessor as well as the interests of the Lessee.” Sorry all. This just came to my attention. Amanda, You wrote, "I have my suspicions on why production has slowed, but barring some sort of leak of an internal document, I won't be able to report them." I've only heard it once, but one of the producers is running ads on TV claiming North Slope production could get increased to one million barrels/ day. That's a nearly 50 percent increase from current amounts. That would be huge. I have been assuming it would take a lot of capital investment to increase production. Or would they just need to open the spigot? If they are sitting on oil speculating they can just wait and extract later after taxes have been minimized by a future legislature, that would be crummy. I'd like to know the specifics from them. If they claim they can increase production to 1 million barrels as a consequence of tax reduction, exactly what would be required from them to reach this flow, how long could it be maintained, and what would their additional costs be? If I heard correctly, the ad vaguely claims producers reached some kind of understanding with the Governor to increase production in exchange for reduced taxes. We need to know more. If they won't tell us, perhaps the Governor could add his legislature and the rest of his State to the loop? Amanda: I'm not a reporter, so I'll say it. It looks like blackmail. One would expect blackmail. And it puzzles me that the power brokers of this state seem to take it as an article of faith that the oil companies are showing their whole poker hand. Are our leaders that gullible, or has not that much changed since 2003? Ms. Coyne, No tax cuts for Big Oil! Leave ACES alone! All this doesn't change one key factor that Alaskans forget. Without the oil companies WANTING to do business here, and to hire Alaskans when they want to do that business, there is almost no economy left in Alaska. Fishing and tourism is not enough to make Alaska prosperous. Take away oil entirely as some environmentalist want and thousands might as well burn their homes to the ground and move away, cause there is nothing else that will sustain the States economy. And who will want to buy a home when they can not manage to find work in the area? No one. Tourism is a very minor % of the states income base. If people are not working they dont buy things, they dont go out to eat, or go to the movies, they dont splurge on high value electronics or vehicles, or whatever. And if they are not doing any of those things then is a given to say then people are not building homes or office building or roads or whatever... Its a cascading effect. Even if somehow we allowed nuclear, or geothermal power to sustain the energy needs of the state, what else do we have that will produce the economy to sustain it? MAYBE natural gas someday if we ever allow it to happen. As it is most of those highly prized north slope jobs are granted to cheaper and more qualified personnel from outside the state. After all Alaska also boasts one of the higher cost of living locations in the nation with our artificially inflated gas and heating oil prices that we all endure with no hope of a competitive turn around in those fixed monthly costs. That alone makes everything else more expensive, from food to retail goods cause its all got to be shipped up here after all... And if we get a raise somehow, be it in a union contract, or even on quality of work merit, its meaningless because those costs are passed on in the community and everything just gets more expensive. Add this Inflation to our inevitable loss of economy and it spells disaster in the near future. So best PREY that the Greenies dont get what they been demanding and push the oil companies out of the state for good. They certainly have the incentive on the table to wrap up operations at any point in Alaska and move on to more profitable areas of the world. Whoa WW!, Be fair, you say tourism is "very minor", but do you realize it employs somewhere around 44,000 people and is the #2 Employer in the State? Here is another point for you. 99% of the tourism employees in Alaska are Alaskans, one cannot say that about oil employees? Properly managed, tourism in Alaska is sustainable indefinitely and will be employing Alaskans long after the oil runs out. Oil exploration and production is #1, but how far into the future is it sustainable and what happens when it is gone? What do you do then? This is of course considering that you wish our generations legacy to be based on something more than "getting our share today and the hell with the consequences". And you apparently have issue with, as you call them "the greenies". Tell me, if it wasn't for those "greenies" what would much of the drinking water be like today? Maybe you should have a talk with those people who live in the Pavillion, Wyoming area as to how they now like to have their drinking water trucked in because no one(greenies)were around to question fracking methods being employed. Now there is a reason people could probably "burn their homes to the ground and move away as you said" and it wouldn't be because of the "greenies" http://www.usatoday.com/money/industries/energy/environment/story/2011-12-08/epa-fracking-pollution/51745004/1 You call them "greenies" but I would prefer to call them environmentalists. Without thousands of these people employed inside and outside the ranks of the oil company's, oil employment would likely fall to #2 position behind tourism. Think about that for a minute and upon looking into it you will see "greenies"/environmentalists make up a huge part of the workforce in oil exploration and production. I like all Alaskan's appreciate clean water and clean air and for that I will often take the side of the "Greenies" on those issues and in good part because I want to leave those "clean" values to future Alaska generations. Thanks Alaska Dispatch for your researched reporting. I doubt much if any tax revision is necessary or even desirable. Companies who want taxes reduced won't provide basic information that our legislators would need before our legislative branch could even start to objectively evaluate the need for tax reduction. If it was in producers' interests to provide hard data to obtain a couple billion/ year reduced taxes, you'd think they would. Legislators should specify what information they'd need before acting further. If producers won't cooperate, the legislature should not proceed. We've heard plenty from their lobbying/ marketing. It's time for their accounting to come clean and spill the beans. If they want to keep us in the dark, fine, that's their decision-- if so, let's leave the taxes alone. |
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