Senate Finance tackles oil, gas taxes

The seven members of the Senate Finance Committee are rolling up their sleeves for an exhaustive review of oil and gas matters through this week and into next.

The schedule set by co-chairman Sen. Bert Stedman, R-Sitka, is boggling. One Capitol insider who was around for the lengthy ACES debate a few years ago sighed heavily, and said it feels almost like those days are here again.

Starting Tuesday morning, the committee will take testimony - likely to be high-level and excruciatingly detailed - on oil and gas production, taxes, employment, lease expenditures, well costs, and more. They'll meet on the topic between 9 and 11 a.m. each morning, continuing between 1:30 and 3:30 p.m., with the pace to continue at least the first few days of next week.

The emphasis is only fitting, with some saying the state's future is at stake. Republicans are largely clamoring for oil tax reforms, offering oil companies a sweeter deal that they hope will spur investment and production. Democrats aren't as eager to tweak the tax structure that was passed only a few years ago, and which they say is working fine. Companies don't need more incentives, they say, but for the state to hold their feet to the fire to develop the leases as promised.

Stedman himself is one of the few lawmakers who hasn't weighed in publically on whether reforms are needed.
Instead, he's suggested lawmakers should lay out all the facts on the table, hear from the experts, and carefully weigh what changes may be appropriate.

He has, however, weighed in loudly on the need for Alaska to address its tax on natural gas, especially before producers have a chance to lock in the current rate at the start of an open season May 1. Those rates could cost the state dearly if the disparity between oil and gas prices holds, Stedman has warned. His solution? Unlink gas from oil, and set a separate tax scheme for gas that includes distinctive progressivity levels.

Right now, gas is taxed on a 6-to-1 ration with oil.