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My Turn: Business benefits from SB21

Posted: August 4, 2014 - 11:01pm

I am against ballot proposition 1, which is designed to nullify SB21 and reinstate the failed tax policy called ACES on North Slope oil production. SB21, the current tax law, is a reasonable and fair tax that has encouraged development of more oil production, and will put more oil in the pipeline. My opposition to ballot measure 1 is grounded in my belief ACES was a tax structure that discouraged oil investment in Alaska and helped to accelerate the decline in North Slope production.

My father, Walter Hickel, was the founder of our company, Secretary of the Interior under President Nixon and twice Governor of Alaska. He was a believer in the “owner state” and a strong proponent of resource development including oil.

It was during his first term as Governor that Prudhoe Bay was actually discovered. He surely believed that oil companies should pay for the extraction of oil, but he did not believe in confiscatory taxation that would act to bar development of Alaska’s resources. He was a fiscal conservative who believed that fair taxation on oil and other industries was in sync with the owner state philosophy. ACES was not a fair and equitable tax. It was complex, understood by few and needed revisions.

Our family-owned company is not a member of the oil industry. Our company serves Alaskans and others with hotel rooms, food and beverage outlets, office and retail spaces to rent, and we are developing residential lots in south Anchorage. We serve the tourism industry, the convention business, business travelers and government employees of the federal and state governments. Our business is certainly influenced by the oil industry, but only because the oil industry is the primary driver of the overall Alaskan economy and the Alaska state government.

If the Alaskan business climate is unfavorable, we see reduced revenue. This affects our company and each one of our associates who depend on that economy for their livelihood. When the business climate is positive, we see precisely the opposite effect, and each of our associates can realize a better standard of living. I personally believe that SB21 has caused increased business activity on the North Slope and throughout Alaska, contributing to a stronger and more vibrant economy by providing and sustaining jobs in our company and elsewhere in the hospitality and real estate industry.

Our family believes that Alaska is the best place on earth to live and raise our children. We are, therefore, committed to the longer-range view for our decisions. ACES was a short-term idea — it maximized government revenue with an unprecedented level of oil tax.

This year is the antithesis of 2010-2013 when oil taxes were high with the corresponding decline in oil production. The current environment encourages investment activity in many sectors of the economy, for example, oil, tourism and retail to name just a few. Hickel Investment Company will accelerate the development of Resolution Pointe, our home subdivision in South Anchorage, by making the capital investment in the infrastructure of the last three phases in 2015 — three years ahead of schedule.

A repeal of SB21 which reinstates ACES without tax revisions will in the long term have a negative impact on the economy, all Alaskans and our company.

As a lifelong Alaskan, born and raised in Anchorage, I believe that voting no on ballot measure 1 is good for the people, the economy and the state of Alaska.

• Walter J. Hickel, Jr. is the chairman and CEO of Hickel Investmen Company and Hotel Captain Cook.

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Art Petersen
Art Petersen 08/05/14 - 05:35 pm
Walter Hickel, Jr. "believes"

SB21 is already stimulating oil production, but believing is not knowing. What we do know is that it is far too soon to tell whether SB21 has had any effect on the production of oil.

Something else we know is that the driver of everything related to oil is the world economy. Instability in Libya, and the price goes up; conflicts quelled, and the price goes down. But what remains constant and constantly increasing is the world-wide demand for oil. That is what is and will be stimulating the demand for oil, and demand is what is and will be stimulating the development of oil production in Alaska and around the world for a long time.

It cannot be known now how Governor Wally Hickel would see SB21, but based on what he stood for as an Alaskan and as a savvy and highly successful Alaska man of business, it seems unlikely he would support oil industry employee legislators giving away Alaska's oil wealth to their employers. As a man of principle, Secretary of the Interior Hickel opposed the Viet Nam War, and President Nixon fired him for it. And as a man of principle, it seems reasonable to assume he would oppose such a blatant legislative conflict of interest. Most likely, it seems reasonable to believe Governor Hickel would say, "We don't need to give away the people's resources to be successful. Let's just repeal the giveaway, fix ACES equitably, and get on with it."

Haily George
Haily George 08/05/14 - 09:07 am
Our oil is a scarce resource

Our oil is a scarce resource.

Reducing taxes to increase production of a scarce resource is stupid.

vote YES to Repeal SB 21 giveaway

James Coleman
James Coleman 08/05/14 - 07:48 pm
New world?

I remember not too long ago any strife in the Middle East would send oil markets all over the board. Speculation, profit taking, panic, we usually saw huge jumps in prices and panic at the pump. Its not that way anymore, we have Israel vs. Hamas, a very belligerent Russia, the Arab Spring, etc. The cost of a barrel of light, sweet crude remains right around $100 per barrel. We really need to think about this, Big Oil can mothball Alaska and wait it out.

Mathew  Mulligan
Mathew Mulligan 08/06/14 - 06:52 am
Profits Up, Production Down

We can know how much oil goes through the pipeline and what it sells for, but what nobody can know is what the change in production would have been had ACES not been changed. We can also know that Alaska is getting less money and Big Oil is getting more. The billionaire CEO of Conoco-Phillips just retired in June and was given a $260 million severance check. If there is one industry that does need a tax cut it's oil and gas.

Karl Ashenbrenner
Karl Ashenbrenner 08/09/14 - 02:35 pm
So we will

just giveaway our resource so that oil businesses will hopefully get a bump in business activity while destroying all the other industries that rely on oil REVENUE, construction, schools etc. Great way to put your eggs all in one basket while hoping that the overall economy doesn't crash. At least we can look forward to Anchorage finally having a sales tax.

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