Posted on 08/22/2011 8:17:41 AM PDT by The Bronze Titan
Oil companies in Alaska are paying more money in taxes than ever before. The state's oil and gas tax revenues for its just-ended fiscal 2007 topped $10 billion. That's twice as much as fiscal 2006 and four times more than 2004. Some supporters of Barack Obama see that money coming in and say that John McCain's running mate, Alaska Gov. Sarah Palin, must have done what Sen. Obama wants to do -- sock those companies with a big fat windfall profit tax. This is a deeply misleading reading of her 2007 tax reform.
...continued HERE.
(Excerpt) Read more at online.wsj.com ...
Amazing that Texas, North Dakota, Louisiana, Oklahoma can make this work with such complications.
I left the Alaska Oil Patch in mid-2007 when it became obvious the North Slope industry was going to be stifled. I returned to Texas doing the same thing, for often the same clients (ConocoPhillips for example). The engineering group I was leading within a couple years went to 1/3 its size while in Texas they were hiring like crazy.
All places has their ups and downs in this industry. But for several years as the previously started projects completed and little else took their place, it becomes obvious to most that taking up to 80% of the revenue is not going to be competitive.
People keep throwing out the 25% base rate as if that was the only tax. That is only a piece of the government take and only at $30/bbl or lower.
It appears as time progresses under the ACES and the resulting jobs and production decline, more Alaskans are agreeing it is too high.
Q: How do you feel about having the legislature reduce oil production taxes? Do you strongly favor; somewhat favor; somewhat oppose; or strongly oppose the state legislature reducing taxes on the oil industry?
Percentage of Alaskans in favor of reducing oil production taxes
February 2011 - 47%
May 201 - 59%
http://www.makealaskacompetitive.com/documents/alaskans-support-changing-aces/
It isn't just oil workers that this impacts. Every one in my department up there bought clothes, went out to eat, bought movie tickets, etc. We still do that, but many of us are now spending those dollars in the lower 48.
Some resources are different than others. Wind and tide are sort of like timber - you either have them or you don’t within your property line.
The Ogallala aquifer? You bet that’s a state resource, and they have so screwed themselves with respect to the shape that aquifer is in.
Greed is good for everyone. Again, if you own it, you should be able to profit from it. If the State owns it, and you are a citizen of that state, then forget putting that money into some coffer somewhere for some pencil-neck to spend - cut the citizens a check. It’s the only way they will get any kind of idea of what that resource means to the larger state economy.
Seattle killed the timber industry in the entire state. They could do that because it was Seattle vs. Aberdeen. It should have been Seattle vs Every Washington Resident, including Seattlite Morons.
If the state builds a wind driven electrical generation facility on state property, a dividend check should go to each citizen. Same with hydroelectric projects. There would be a helluva lot less idiots here asking for these dams to be torn down if people got dividend checks.
I’ll tell you this - it would STOP the government from entering businesses they shouldn’t be entering.
“How come my check did not show up this quarter?”
“Well Mr. Taxpayer, we hired idiots to run the dam project and we think we won’t be in the black for the next 20 quarters - sorry!”
Today, that’s swept under the carpet, along with failed investments in GM, Chrysler, the Banks, etc.
If the US wants to be a business, then its citizens should DIRECTLY benefit. It would be SO MUCH EASIER making such state-run enterprises live by GAAP rules and Sarbanes-Oxley requirements. Defrauding shareholders and defrauding taxpayers would have the same elements and the same burden of proof.
If the discussion about whether the state gets into a business becomes, “We are going to need to pay the right people to run it, because taxpayers will be looking for their check in the mail,” then we have advanced government’s understanding of how capitalism works.
Palin both forged and IMPLEMENTED (actually did it) a strategy whereby the State, the Taxpayer, and the Oil Company benefitted in a way that was transparent to all parties, and furthermore incentivized the oil companies to pump all it could, while taxpayers received benefits that elevated when the price of oil was high, and declined when the price of oil dropped. Simple, smart, and effective.
I contrast that to a healthcare overhaul that had to PASS CONGRESS before anyone could see what was actually in it.
That DEMONSTRATES expertise in my book, having done business with oil companies, governments, and taxpayers.
I’ve seen landowners here in WA state stand in the way of huge commerical projects that could bring in hundreds of jobs just because they didn’t want to. One case here, in fact, the tool didn’t provide proper draining of his property during the five years this mill tried to buy his land, at which point his entire 40 acres was designated ‘mosaic wetland’.
What that meant was that the genius owner now possessed land he could neither develop nor sell for any appreciable amount. I’m all for property rights, but that doesn’t we forgo a great deal of economic opportunity to uphold those rights that we otherwise wouldn’t.
In most cases, it isn’t the property rights that are the problem, as in the case above. It’s the infringement on the rights of usage imposed by government.
We have a doozy of a law up here called “The Forest and Fish Law” which requires confiscatory setbacks of private land, plus mitigation requirements that are positively collectivist in order to comply.
The state isn’t required, and doesn’t live, by those same laws, however. It would be different if taxpayers became shareholders for resource related projects on state owned property.
The other massive problem this would solve is the federal land grab. Most states would annex it back and tell the feds to shove it. Eventually they’d prevail too, once people started getting those checks.
You want government to start behaving like a business? Turn certain state resource aspects of it into a business and the 9th and 10th amendments will get their teeth back. Today the feds take all the cash, and dole it back to the states. The shoe would quickly be placed on the other foot.
IS PALIN AN EXPERT ON ENERGY?
You seem to be dodging that question...and I'm not going to quit asking it. Since you stated it as an apparent fact.
I'm not trying to be contrary...but it was you who said that.
Announce soon, Sarah.
Thanks for posting this and it should be an interesting debate. The main problem is that people don’t truly understand how different Alaska is from the lower 48.
Palin got a good deal for Alaska and it’s citizens. I understand the complaints from some on this thread that it violated the ideological purity of conservatism but that purity also does not account for the government owning all but 1% of the land. I count the native populations and land grants as government. That ideological purity does not account for the reality that the Federal government impedes the incredible amount of jobs, production, and economic activity that could take place in Alaska in a free market with reasonable environmental protections.
“And having them all linked together makes it likely that proper environmental stewardship of the land and water will be done. Bad logging practices can harm salmon populations.”
Precisely. In fact, I would think that Alaska State Gov’t gets some sort of report on the state of the state’s resources on an ongoing basis. I would also think there would be further incentive for the owner and the developer to work together to most efficiently maximize and extend that resource for as long as possible.
I went to a town hall for our local US Rep, who is Rick Larsen, D(2nd District). As a D in this state, with all its environmentalist pressure, even he’s in favor of allowing logging in areas where trees were planted specifically for the purpose of harvesting. Now that the harvesting has been prevented, the trees have grown so big and close together that it is actually damaging the local ecosystem and preventing the efficient harvesting of what’s there. It’s also becoming a rapid infection area for Japanese Beetle infestations.
Because they waited, and because NOBODY in the federal government was fiduciarily accountable, that forest will likely succomb to harvesting on a grand scale TO PREVENT other forest from becoming infected.
I’m telling you, if we were getting a check here - legitimate registered citizens of the state - it would be IMPOSSIBLE for the feds to lock up all the economic-boosting land they currently do.
I believe you are confusing the royalty payments with the production tax and other taxes paid.
A portion of the royalty payment is what goes into the Alaskan Permanent Fund and is distributed to the Alaskan People in a yearly check. Governor Palin did not set this. She did not change it in any way.
Governor Palin implemented the ACES tax plan to replace the PPT. This is a tax on the profit, like the PPT was. This money goes only to the state government for its spending; it is not part of the permanent fund.
ACES is purely a tax. It is a tax on what revenue is left over after the royalties and other approved expenses are deducted leaving the profit. It has nothing to do with the ownership of the oil. Ownership of the oil results in royalties.
In Alaska, the royalties for the native land goes to the natives, federal royalties for the federal land, state royalties for the state land.
From the statues: Chapter 43.55. OIL AND GAS PRODUCTION TAX AND OIL SURCHARGE
Article 01. OIL AND GAS PRODUCTION TAX
Sec. 43.55.011. Oil and gas production tax.
(e) There is levied on the producer of oil or gas a tax for all oil and gas produced each calendar year from each lease or property in the state, less any oil and gas the ownership or right to which is exempt from taxation or constitutes a landowner's royalty interest.
http://www.tax.alaska.gov//programs/documentviewer/viewer.aspx?128s
See how it is clearly separate for the ownership and corresponding royalties? This is a tax applied to oil produced on native land or federal land as well as the state lands.
It is a tax for the privilege of producing oil within the State borders regardless of who owns the oil. It is a tax in addition to the royalties, property tax, corporate tax and federal taxes.
Same questions....
Here’s your answer:
Is she an expert in terms of how the private energy industry, and the states administration of the mineral resources, work together to advance the interests of the taxpayers of Alaska while at the same time providing incentive for the citizens and private interests to properly balance the needs for both management as well as development, the answer is an unqualified YES.
Yes, in fact, to an extent that NO OTHER EXECUTIVE HAS APPARENTLY HAD THE ABILITY TO PULL IT OFF TO THE SATISFACTION OF ALL INVOLVED.
Can Governor Palin build a Thorium reactor in her basement? Probably not.
Not looking for a petroleum engineer here. Looking for a chief exec that knows how to balance the interests of the taxpayers with the needs of businesses in a way that the agreement provides all the incentives necessary for the interests to work together.
Most politicians are fine with allowing each side to preserve their idiotic agendas so that nobody’s interests are served.
She got it done, and it didn’t depend on ideology. She found a MARKET BASED WAY TO DO IT. Give the taxpayers a check and make them partners and they’ll be more agreeable to oil companies developing their resources.
Moreover, she’s made it more attractive for oil companies to work with governors than with feds. Feds are feds in every country, and they just can’t WAIT for you to develop their resources so that one day they can nationalize it.
Doing it Palin’s way ensures that each party sticks to what its best at without creating massive bureaucracy to regulate it into a cocked hat.
Bump for later
Excellent presentation!
Okay..
Do you understand that many in Alaska have figured out that this tax is too high and is preventing further investment in the state?
http://www.makealaskacompetitive.com/documents/alaskans-support-changing-aces/
Alaska battles over how lifeblood oil is taxed
http://www.freerepublic.com/focus/f-news/2698091/posts
Parnell proposes changes to oil, gas tax to boost production
http://www.freerepublic.com/focus/f-news/2659028/posts
Oil Cos Tell Legislature Investments Lost Due to Taxes
http://www.freerepublic.com/focus/f-news/2699443/posts
Governor says he’ll pursue oil tax cut to raise production
http://www.freerepublic.com/focus/f-news/2727594/posts
“It appears as time progresses under the ACES and the resulting jobs and production decline, more Alaskans are agreeing it is too high.”
Hopefully the state will revise their tax rates, etc. to take into account the current situation. Obviously the oil companies, like any consumer, are going to go where they can get the best price. The trouble is, while the state is taking advantage of the free market, it may not be able to respond as quickly as it should.
I have posted on other threads like this that “If the oil companies don’t want to drill there, they can leave”. Sounds like that is what they are doing. And hopefully Alaska can remedy that quickly.
Change quickly and often is part of Alaska's problem. Where many places like Texas have a stable tax structure and policy supporting business development, Alaska changes theirs often.
When a company considers investing billions of dollars for a facility that will operate for decades, a history of changing policies, and sticking it to the companies after the dollars are invested, are a sure way of encouraging investment somewhere else.
Well, your observations are dead on. The bottom line, whether it’s Alaska or Texas, you have to keep your product “source” competitive. Each origin has ‘tools’ at their disposal to manage that in some way, and Alaska (being a ‘sole proprietor’) actually has more leverage over the costs (relative to their oil fees, permits, :”tax”, etc.... They just have to do what’s necessary, and lowering the “costs” (ie. their “revenues”) is going to have to be done, just like any other entity struggling to stay competitive.
I hope fellow Palin supporters are bookmarking these types of threads because we are going to need them as rebuttal against attacks while she runs for President.
Since that time, many in Alaska have figured out that the ACES tax system was too high and costing the state production and jobs.
Read the replies, and pay attention to links to more current articles discussing the proposed changes.
I saw your crappy links.
You are posting MSM AP garbage.
You should consider that.
Production decreased, not increasedIs that a graph or a rorschach test?
Silly me I confused record profits with increased production. Who could guess that reduced production would result in record profits?
So do record profits have anything to do with increased tax revenue? Or is increased tax revenue only due to Palin tax increases?
It’s a royalty check. Read the AK Constitution. The people of Alaska OWN the oil, and the gold, and all the other valuable minerals in THEIR State.
And the payout is tied to production. No production, no payout. High production, high payout, low production, low payout. At least that’s my understanding of how it works.
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