Parnell orders review of Palin administration oil taxes

Anchorage Daily News ^ | Dec 10, 2009 | Sean Cockerham

[proud_yank]

ACES: "Tweaks" possible, but only if they yield more jobs, revenue for state.

Gov. Sean Parnell is reviewing whether to change state oil tax laws implemented under Sarah Palin, as oil companies blame the taxes for driving investment dollars from Alaska to other parts of the world. The governor said Wednesday that he has asked the state Department of Revenue to evaluate whether any "tweaks" should be made to the tax system that could lead directly to more jobs for Alaskans. He said he's also spoken with oil companies.

"My bottom line, if they need tax changes, and it will result in more investment, I'm all for it," Parnell said in an e-mail. "But the companies will have to justify changes in light of Alaskans' interests -- I don't intend to merely shift tax revenue from Alaskans' pockets to company pockets; instead, I intend to create more jobs and revenue for Alaskans in the long run in making any tax changes."

[proud_yank]

Decent read. Tax cuts = more private sector jobs. I pray they do away with this monstrosity.

[sinanju]

“It’s a profits tax. When their profits go up wildly, like they were, then Alaskans should benefit from it. It’s our resource, it’s our future, and we had been undertaxing for decades,” Kerttula said. “Now, with the oil price down (the tax) is significantly less ... so we fluctuate right along with the industry.”
___________________________________________________________________________________________________________________________

I figured it wouldn’t take long for the oil companies to get busy pulling strings to undo Sarah’s work. They’ve long been accustomed to having their way in Alaska.

Now, whether this tax really is squelching oil exploration there, I don’t know, but the previous statement says the tax goes up and down along with oil prices so it can’t exactly be called regressive.

[21twelve]

“Decent read. Tax cuts = more private sector jobs. I pray they do away with this monstrosity.”

I know it get’s called a tax, but my limited understanding of it is that it is a royalty. The Alaskan people (via their state gov’t) are the only folks in the U.S. that own all of their resources - its in their constitution. (They weren’t going to become a state unless they could be assured that their huge wealth of natural resources would be theirs.)

Palin got rid of the slick deals between the “good ol’ boys” (with kick backs no doubt) and the oil companies to bring a fairer price to the citizens (the State).

Sounds to me like the New Governor is looking to adjust the price of their commodity to be in competition with other countries. Glad that he realizes that they can go elsewhere as the prices and demands change, and that he will do what he can to keep them in the state. I suppose perhaps the oil firms figure he might be easier to dicker with than Palin too. I just hope that he doesn’t turn into another “good ol’ boy”.

I wish some of our politicians would get this through their heads as more and more jobs are outsourced. Well, them and the unions. (Boeing just moved a huge part of their operations to union-free South (North?) Carolina.

[ASOC]

saraH did such a good job no drilling is going on in Alaska, One well on the OCS, which is a FedGov show.

Anchorage is running out of NatGas, due in part to no drilling becuse the STATE will not issue permits - these are the folks hand picked by saraH -so she may be gone, but not forgotten.

Parnell had best get his act together or Samuals will cream him in the primaries. Sean is not getting my vote - this is something he should have done months ago.

[proud_yank]

Now, whether this tax really is squelching oil exploration there, I don’t know,

It is. That tax code has done more to slow oil development in AK within a couple years than environmental groups have been able to do in a couple decades.

Industry less and less happy with ACES
http://www.petroleumnews.com/pnads/451408700.shtml
Companies tell Senate Finance that more taxes will lower, not raise, investment levels; bill includes more than two increases

Production tax hike moving
http://www.petroleumnews.com/pnads/115784120.shtml
An increase to a 25 percent tax base and aggressive progressivity are features of committee substitutes for Gov. Sarah Palin’s revision of the petroleum profits tax. Committee substitutes reached the Senate and House Finance committees Nov. 5 and Nov. 6, respectively.

Administration wins on tax increase
http://www.petroleumnews.com/pnads/282701155.shtml
Gov. Sarah Palin gets 25% tax requested in ACES, Democrats get standard deduction; level of continuing investment the worry

Conoco: ULSD facility won’t be built
http://www.petroleumnews.com/pnads/247520025.shtml
State of Alaska’s tax changes blamed; Revenue Commissioner Pat Galvin says facility wouldn’t have qualified under 2006 PPT

Conoco backs off $1 billion figure
http://www.petroleumnews.com/pnads/932118696.shtml
Alaska tax raise: the company will rethink its spending, official says

but the previous statement says the tax goes up and down along with oil prices so it can’t exactly be called regressive.

It is not directly proportional to the price of oil/bbl. Past a certain price, the tax rate soars and money is lost because operating, maintenance, drilling, etc costs rise (generally) proportional to the price of crude.

That eeeevil oil industry accounts for over 80% of the state's budget.

[Josh Painter]

No, the production tax is not squelching exploration in alaska. When Palin increased the production tax by 2.5%, she raised the exploration tax exemption by 10%.

This is just the oil companies crying wolf. No, the oil companies aren’t “evil” but they will certainly say anything if they think it will increase their profits, which lowering the production tax will do. Unfortunately for the average Alaskan, it means smaller royalty checks.

- JP

[proud_yank]

Read through some of the links in my previous post for some more info on the effects of this tax hike.

The Alaskan people (via their state gov’t) are the only folks in the U.S. that own all of their resources - its in their constitution

No, the Alaska state constitution does not explicitly state that the people own all resources. Plus, that's rather socialist. I also don't recall anywhere that it states that smoking dope is ok too:) (People tend to get that confused too)

Article 8 - Natural Resources (AK Constitution)

Glad that he realizes that they can go elsewhere as the prices and demands change, and that he will do what he can to keep them in the state. Trust me, so am I!

[proud_yank]

No, the production tax is not squelching exploration in alaska. When Palin increased the production tax by 2.5%, she raised the exploration tax exemption by 10%.

Really? I heard that Conoco announced they are cutting their exploration drilling for 2010.

This is just the oil companies crying wolf. No, the oil companies aren’t “evil” but they will certainly say anything if they think it will increase their profits, which lowering the production tax will do. Unfortunately for the average Alaskan, it means smaller royalty checks.

Many average Alaskans are concerned about the economic downturn from high taxes on one of its biggest employer.

[proud_yank]

saraH did such a good job no drilling is going on in Alaska, One well on the OCS, which is a FedGov show.

I do enjoy the irony of listening to preaching about opening ANWR though.

[RobbyS]

This is the same game that the majors played in Texas. Except in Texas, there are a lot of independents, and they piggy-backed on policies that benefited the independents while trying to squash policies that benefited ONLY independents. The same corporatism that puts politicians of both parties in bed with Big Business.

[RobbyS]

Unless you play hardball with these guys they will take you for a ride. The Arabs learned how to play the game a long time ago. The majors are able to buy American politicians for what is pocket change to them. The sheikhs are smarter than that.

[proud_yank]

Unless you play hardball with these guys they will take you for a ride. The Arabs learned how to play the game a long time ago.

Could you explain that further? Do you mean play hardball, like Hugo Chavez is playing with the energy industry in Venezuela?

Also, should we model US domestic and fiscal policy to mirror the middle-east?

[StandUpChuck]

Hardball as in...The state leases land (Point Thomson) to the oil companies with a promise of oil production and almost 30 years later you have to threaten them to use it or lose it. The oil companies have a bad habit of leasing land, throughout the United States, and promising exploration but not delivering. I guess it is low on the to do list since they are already making billion dollar profits.

But if you want to blame Palin for all of this, then have at it.

[RobbyS]

No, I mean the way that the sheikhs learned to play the game with the majors, so that they got the lion’s share of a depleting resource and are therefore able to do what is in their best interests. The Latin Americans have always played a fool’s game, just look at Mexico. Hardball means you make deals with the big companies that are mutually beneficial. The Mexicans have simply screwed up and Chavez is doing the same.

[Eska]

Hey BIG E, how ya doing? Had an army buddy we all called big E come to think of it; so that's your new name. Been warm up here, plus 10 tonight. Indians snaring all kinds of snowshoes and I got the santa suit duties down the hall this xmas; told Issac that you said hello. Benny at mentasta got his taters too, thanks. Kids be home from school nx weekend, go cut some wood. Looking forward to doing some hunting nx summer & fall. Nephew's coming up to hunt after he gets back from Afgan.

You won't find one Alaskan who wants the oil companys to do bad. Most also believe oil companys have had a history of buying off every single political from both partys. Having lowered their taxes over the last 35 years is what everybody believes they have done, truth ot not.

Palin saw & felt the anger so implemented the new tax structure to pacify the people. I figure she even knows who butters the bread but also who votes in elections. I fear Parnell is barking up the wrong tree, might cause Alaskans to view him as another bought and paid for political; they lose elections over such things up here. I'd waited until after he was elected to even talk about giving the oil companys a break; bad business for him.

Something else, My nephew will be up second week in Jan for training before Afgan; He does para-rescue. He might have a day off at end. If your home, like to have him give you a call, show him around anch if you could. Our road is drifted way shut, closed until april. Give me a call.

[Sarah-bot]

This all comes down to a negotiation. Alaska’s oil is worth the price Alaska can get for it. Who ever is in charge of negotiating for Alaska needs to understand that bending over too far for the oil companies will result in a Democrat becoming Governor of the State. Murkowski was hugely unpopular among all Alaskan’s. If the oil companies drive too hard of a bargain, an environmentalist will become Governor and the U.S. can just forget about Alaskan oil and Gas. The other side of the coin is that the State drives too hard a bargain, but what we are looking at now is election year maneuvering by the oil companies.

[Nik Naym]

They did a nice job twisting that into a negative sounding headline about Palin.

I despise the media anymore. Bastards all.

[proud_yank]

Hardball as in...The state leases land (Point Thomson) to the oil companies with a promise of oil production

Pt. Thompson is not an oil lease, it is a gas lease. There is currently no means to export arctic gas, and the proposed gas pipeline is an enormous expenditure. Given the volatility of the Alaska tax codes over the past two years producers are wary to invest billions of dollars in a project, as they should be.

and almost 30 years later you have to threaten them to use it or lose it. The oil companies have a bad habit of leasing land, throughout the United States, and promising exploration but not delivering.

That is a fair point, however it is part of doing business- Not every lease will be developed, and agreements specify timetables and producers are aware of that. As you said, that is not unique to Alaska. In many cases, a lease can look promising and simply can not be produced or is uneconomical to do so.

Bidding processes are complex, and there is a lot of risk involved. On the other hand, if a company buys a lease and does not produce, in essence they have made a donation to the state ranging from a few million dollars up to a billion + dollars. Last I checked, investors don't usually like when a business can not deliver on a promise, and that is what drives them. In my opinion, we do not need to move towards becoming a command-style economy where business decisions are made and resources are allocated by the state.

I guess it is low on the to do list since they are already making billion dollar profits.

Oil companies, and other large enterprises, earn 'billion dollar profits' as a result of investments that are usually 1-2 orders of magnitude larger.

The profit margins on coffee, bottled water, milk, shampoo, nail polish, jewelery, and numerous retail goods are FAR higher than those on oil and gasoline. I'd be interested in hearing your thoughts on the fact that companies will conceive products that don't always make it to market (which is analogous to a company not developing a lease)

But if you want to blame Palin for all of this, then have at it.

For the point we are debating, I hold her accountable for constant changes to tax codes and the business/investment environment it created.

In a broader perspective, there are things I find admirable about her and issues on which I firmly agree (social issues, mainly).

Regarding public figures, I look to ones' past performance as being indicative of their future behavior. Fiscally, she is not a conservative despite her rhetoric and her policies illustrate that (unless high taxes are now 'conservative'). I do hold her 100% accountable for the negative economic impact her taxes has caused. Gov. Parnell is doing the correct thing by looking at reversing them. If a democrat had enacted her tax codes, they would be crucified on FR and called a socialist.

Would I take her over obama, absolutely. Would I vote for her if she was on the ticket, probably. Would I support her in the primaries, hell no.

[proud_yank]

Hardball means you make deals with the big companies that are mutually beneficial.

The current tax structure is not mutually beneficial, and both industry and state revenues will continue to suffer as a result.

Parnell is right to look at tax reforms that will encourage investment, and which will result in increased state revenues. Since the state's revenues are based almost exclusively on oil production it would be in Alaska's best interest.