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My Turn: SB21 myths are 'baloney marinated in oil'

Posted: August 13, 2014 - 11:06pm

Nearly 50,000 of your fellow Alaskans signed a petition to give you the opportunity to say “yes” to a referendum that would repeal Senate Bill 21. A crucial vote will occur Tuesday, Aug. 19. Residents will be asked to affirm the courageous Alaskans who have made this voting opportunity real. There is no way, however, that the grassroots efforts to overturn SB21 can compete with big money — we just can’t.

Big Oil and its supporters are spending tens of millions of dollars. Many polished claims are advanced that likely make you wonder. Be wary of the slick and smooth-tongued big money campaigns, which are trying to mislead you.

A few core points may be kept in mind to help you vote “yes” on Aug. 19. Oil decline started in 1989 and taxes had nothing to do with it then, or now. Political statements unconnected with reality in 1999 made the false promise: No decline after ‘99. The last 15 years have proven the political promises were false in 1999 just as they are now. If SB21 had applied in FY 2012 to two fields, Prudhoe Bay and Kuparuk, Alaska would have lost $1.7 billion from just those two fields. SB21’s tax structure drops Alaska at least $1.4 billion below North Dakota’s projected revenue in FY 2015. In FY 2014, which ended in June, Alaska’s deficit was approximately $2 billion.

Now, Alaskans are told that SB21 should be credited with the slight bump in production in 2014. Bumps in production were predicted, under ACES, in 2011 for calendar years 2014 and 2016. SB21 backers would falsely claim credit for the sun rising in the east if they thought it would buy your vote.

In the mid-1990s, the Big 3 determined spending more money on surface treatment facilities in Alaska was “unwarranted.” Alaska’s North Slope was in harvest mode decades before ACES and oil profits were deliberately removed from Alaska. Decline started in 1989 and ACES was enacted in 2007; it’s not responsible for throughput decline. Rather, harvest decisions made 20 years ago by Big Oil are responsible for throughput declines since the late 1980s.

North Slope processing facilities have been maxed out for decades. Current declining throughput was designed, engineered and intended decades ago and long before ACES. Under ELF (Economic Limitation Factor), the tax system before ACES, 15 of 19 producing fields paid zero or next to zero percent production tax. Alaska has “been-there-done-that” with low or even no tax and there was no increased production in the pipeline.

If SB21 were applied to the entire period of ACES, the people of Alaska would have lost about $8 billion in revenue. SB21, over time, gives away too much and will not pay for itself.

A particular erroneous myth that has been advanced by Big Oil and its supporters, including politicians like Gov. Sean Parnell, is that cutting taxes will increase throughput from Prudhoe Bay and Kuparuk. This is a false statement. I searched for a way to explain this without having readers’ eyes glaze-over. A Pulitzer Prize-winning business journalist at the Los Angeles Times, Michael Hiltzik, this year wrote about the falsehood advanced by Big Oil in Alaska.

Hiltzik wrote on Alaska oil taxes and the false propaganda that lowering taxes will increase throughput, saying, “This is baloney marinated in oil.”

“Petroleum economists generally counsel that state oil taxes have no effect on production decisions, which are guided by the world market price,” says Hiltzik.” He concludes the article by stating the “claim that low taxes mean higher production will continue to walk the land, like a zombie.”

Big Oil and our governor’s false argument is dead; it just hasn’t stopped moving. The falsehood keeps moving because without it SB21 would be DOA in August.

Big Oil and its big-money ads are filling the political pipeline with baloney — and it is marinated in oil. That’s why Alaskans should vote “yes” on Ballot Measure 1.

• Joe Paskvan if a former state senator and chair of the Senate Resources Committee.

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Art Petersen
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Art Petersen 08/14/14 - 09:00 am
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About the claim of higher production

walking "the land, like a zombie," that's a good one. And so is this My Turn.

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