Sunday, October 21, 2012
Enough is enough with "its our oil"
Technical Writer & Social Media Consultant
Alaska Energy Dudes and Divas
It is unfortunate that because it is an election year that this past legislative session was nothing but an exercise in regards to oil tax reform. The majority of the oil and gas consultants who testified before the Senate this past session were in Anchorage last November and December 2011 for legislative learning sessions organized by Legislative Budget and Audit. Legislators and the public did not learn anything new during the legislative session other than take testimony from the producers and industry groups like the Alaska Oil and Gas Association (AOGA), and the Resource Development Council (RDC).
There has been no change in movement towards oil tax reform that would entice 30-year investment commitments by the producers in Alaska. In addition, the producers were pretty clear in their letter to the Governor on October 1, 2012 that they needed fiscal certainty before moving forward with an LNG gasline project to tidewater. That would be like asking me to commit to my 30-year home loan when the mortgage holder was going to toy with the interest rate from year-to-year. I would have never have made the 30-year commitment to purchase my townhome without certainty, and it is unreasonable to ask the producers to invest billions blindly. Alaskans have a lot to look forward to with all the opportunities before us. However, we need leadership and long-term oil tax reform yesterday because the state is flat out of hail Marys.
It has been years of “groundhog day” legislative sessions with no new North Slope production projects in the queue. Not promising for Alaskans who have become accustomed to a lifestyle that does not include a state income tax, or a requirement of skin in the game by our citizens because we have become spoiled by “our oil.” Is it really in the best interest of the state to have the oil producers moving assets, talent, and their investment dollars to other oil provinces in the world? I know my limits, and I draw the line when "its our oil" legislators, and union backed political action groups mislead, and confuse the public with election year rhetoric. Alaskans deserve the truth.
The “its our oil” crowd would like to have the public believe that all this oil exploration has resulted in new production and new oil into the Trans Alaska Pipeline (TAPS). Investment by the state in oil exploration has not resulted in any new oil production for the past five years, and is that a good use of state dollars with no return on our investment, or no new oil into TAPS? Is it the role of our state government to be picking winners and losers because the “its our oil” believers would like to demonize the oil producers in the eyes of the public?
Alaska's ACES oil tax policy has been on a treadmill going nowhere with no new North Slope financial investment, or new projects on the horizon that will result in adding new oil into TAPS to stem the decline. Money out the door directed by the “its our oil” legislators with no new oil into TAPS, or new tax dollars into state coffers seems “backwards” oil tax policy, and a total lack of regard for the 710,000 Alaskans who have come to rely on the oil industry to fund our state government.
Oil exploration, and shale oil plays should be part of the mix. However, stemming the decline in TAPS and keeping TAPS operational for years to come must be priority number one. Especially, when Shell needs TAPS in year 2025. Contrary to the "its our oil" rhetoric the oil producers have testified they would move forward with several projects they have tabled within existing fields if the investment and tax climate improves for the long-term. I'd rather not participate in the election year rhetoric war. I would prefer we get off the treadmill and get busy with a long-term plan moving Alaska forward.