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Oil tax bill lacks performance guarantees to protect Alaska's economy

Posted: April 3, 2011 - 8:17pm

I just read Tony Hayworth’s comments that BP’s “profits are in a slide”. His remarks came as BP announced annual profits of $14.4 billion dollars for last year, about 45 percent lower than the record $25.6 billion made by the company in 2008. It was the lowest annual profit for BP since 2003, when the equivalent figure was $10.5 billion. In all my research, I could find no year in which BP did not make a staggering billion dollars plus profit.

I must say, looking at the profit margins of BP, and the price of gas at the pump, I can’t muster any sympathy, nor find any rational for simply giving oil companies $2 billion of Alaskan’s money; money we would have for those lean years ahead.

Notwithstanding the wisdom of giving $2 billion of Alaska’s money away, I have to ask why Gov. Sean Parnell and the Legislature would do that without requiring any deliverables, requirements or performance measures for such a large sum of money. For example, oil companies must guarantee an increase of 3,500 Alaska jobs over the next three years; or they must increase oil production by 15 percent by 2015.

What I am talking about here are basic, good business practices and budget concepts any person would expect when they open their wallet. In fact, the Legislature requires some department-level performance measures in advance of funding. Ironically, HB166, sponsored by Rep. Mike Chenault, speaker of the house, and co-sponsored by 27 other representatives would require audits of state agencies to verify that the money spent accomplishes the goals of the Legislature — those that do not perform would be cut, resulting in substantial budgetary savings. Why are oil companies not held to that same standard? Imagine my surprise when the House approved Parnell’s plan to “give” oil companies $2 billion, no performance measures, no audits, no strings attached.

I’m all for investing in Alaska’s oil future and recognize the need to keep oil flowing through the pipeline. However, it is a breach of the Governor and legislatures’ fiduciary duty to give $2 billion away without any contractual stipulations or performance requirements. Alaskans deserve to know what they’re getting for their money, especially when it’s $2 billion!

Joel Casto


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