It’s hard not to miss the full page ads being run by BP, ConocoPhillips and Exxon that suggest Ballot Measure One is not about Big Oil but our jobs, our families and our future. So let’s go through these aspects one by one.
Our Jobs — The “Vote No” groups say for every one new oil job created, nine other Alaskan jobs are generated. While they make no claim as to how many new oil jobs will be created as a result of Senate Bill 21, BP told the Fairbanks News-Miner that thanks to SB 21’s tax cut, BP will now create 200 new jobs on the slope. This equates to the possibility of 1,800 jobs. On the other hand, revenues generated under ACES (the oil tax legislation replaced by SB 21) and spent on public projects — new schools, roads and critical infrastructure — provided jobs for an estimated 125,000 Alaskans. This level of employment was made possible by the state accumulating more than $17 billion in savings under ACES. At the same time that ACES was providing for a robust capital budget, employment on the North Slope actually increased. ACES went into effect starting July 2007. For the last complete year before that, July 2006 through June 2007, state statistics show an average employment of 10,850 oil and gas workers in Alaska. The final year of ACES, 2013, had average oil and gas employment of 14,150, a 30 percent increase. In other words, ACES led to new oil jobs while enabling the state to create more than 100,000 jobs through capital projects.
Our Families — I was unable to find any specifics on the “Vote No” website that explained how SB 21 benefits families. By contrast, the “Vote Yes” group prominently claims, “No family would be comfortable watching its saving evaporate like water and no Alaskan should be comfortable watching Alaska’s savings dry up possibly overnight.”
Our Future — Deciding how SB 21 affects our future depends on what lens one looks through. The “Vote No” campaign is clearly using the oil lens as they cite, “under the old tax system (ACES), Alaska fell from 2nd to 4th in U.S. oil production” compared to other states. They also feature the new investments being announced by BP and ConocoPhillips. For me, the more appropriate lens for the future is our ability to adequately fund basic public services, particularly education. Under SB 21, the Parnell administration’s 10 year budget forecast projects a 47 percent decline in oil production earnings. The Parnell administration predicted that oil tax revenue in Fiscal Year 2015 would be $3.4 billion.
Now the state predicts that with SB 21, oil tax revenue in 2015 will collapse to $1.7 billion. At this rate, the Alaska Legislature is projected to use up all our savings by 2018. This year alone we had a $2.3 billion deficit and struggled to finance the first, very modest increase to the education formula in three years. It was not enough to stop significant layoffs of teachers in several school districts including Juneau. If you care about the state’s ability to adequately fund education from kindergarten to UAS, then you cannot ignore how SB 21 drains state revenues and puts our future at risk.
In thinking about our jobs, our families, and our future, you will see that voting “yes” is the right action to take. I would also point out that in all the give and take about ACES and SB 21, there is a mixing up of purposes. ACES was not created to “put more oil in the pipeline” but rather to give Alaskans a fair share of the oil wealth they own. This is because oil production has been declining for decades — during periods of high and low taxes. Lowering taxes does not and has never improved oil production in Alaska. I know this seems counter-intuitive but one must keep in mind that the best tax breaks in the world cannot change the geology of a declining field that has been in production for more than 30 years.
So the real question before voters is: does SB 21 give us a fair return for our oil leases. According to Sen. Bert Stedman, R-Sitka, one of the few consistent fiscal conservatives, SB 21 structures the return on our oil “as if the State of Alaska is having a going out of business sale on oil”. There is no need for a “going out of business sale.”
According to the Legislative Research Agency, ConocoPhillips makes $28 per barrel in profit in Alaska, almost three times higher than profits in the Lower 48. Even without SB 21, Alaska will remain a strong driver of profit margins for Big Oil.
It’s not about big oil staying in Alaska. It is about our jobs, our families and our future. We need not mortgage them for making highly profitable companies even more profitable.