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Jobs up since ACES oil tax adoption

Administration testimony disputes administration, industry loss claims

Posted: April 9, 2011 - 9:37pm
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Sen. Cathy Giessel, R-Anchorage, left, Sen. Dennis Egan and Sen. Joe Paskvan, D-Democrat, of the Senate Labor and Commerce Committee listen to Dan Sullivan, Commissioner of the Alaska Department of Natural Resources during a first hearing of HB 110, Gov. Sean Parnell's oil tax reduction bill, Friday at the Capitol.   Michael Penn / Juneau Empire
Michael Penn / Juneau Empire
Sen. Cathy Giessel, R-Anchorage, left, Sen. Dennis Egan and Sen. Joe Paskvan, D-Democrat, of the Senate Labor and Commerce Committee listen to Dan Sullivan, Commissioner of the Alaska Department of Natural Resources during a first hearing of HB 110, Gov. Sean Parnell's oil tax reduction bill, Friday at the Capitol.

Employment is up in Alaska’s oil and gas industry since the adoption of the ACES oil tax law was adopted, the legislators were told Friday, contradicting one of the key claims of Gov. Sean Parnell and other advocates of rolling back industry tax rates.

While some companies have lost work, others have gained and total oil and gas employment is up under ACES, the Senate Labor and Commerce Committee, chaired by Sen. Dennis Egan, D-Juneau, was told.

The message Friday came from state Department of Labor Commissioner Click Bishop and economist Neal Fried.

“We’re showing an uptick in employment, there’s no denying that,” Bishop acknowledged.

The department’s numbers for the oil and gas industry in 2000 showed 8,880 jobs, which by 2006 had risen to 10,100 jobs.

It was 2006 when oil taxes began to rise with the passage of the Petroleum Profits Tax. Following revelations of corrupt lobbying for a lower tax rate by an oilfield services firm, the state in 2007 adopted Alaska’s Clear and Equitable Share Act, which raised taxes further.

In the years since, employment continued to rise, Bishop said. He presented numbers showing a high of 12,900 oil and gas jobs in 2009 and 12,800 industry jobs last year.

Parnell and an industry ad campaign against ACES are claiming job losses due to ACES, and giving anecdotes of companies who have lost work on the North Slope and had layoffs.

Bishop presented two possible explanations for the apparent contradiction.

First, he said a significant oil spill from a corroded pipeline in 2006 resulted in an industry effort to fix potentially leaking pipelines.

“A lot of these employment numbers here, these increases, are a direct result of fixing and maintaining leaking old pipelines, Bishop said.

Second, Alaska’s oil producers may be hiring companies and workers from outside the state.

“It’s no mystery to me that there are people in the state of Alaska complaining that their employees and companies are not being worked at Prudhoe Bay,” he said.

“They’re being displaced by people from Outside doing the same work” Bishop said.

Department of Labor data presented to the committee showed a consistent rate of about 30 percent of industry employment was non-resident. New hires over the last year were 47 percent from outside Alaska, the data showed.

Bishop said he met regularly with industry companies, encouraging them to hire Alaskans. At the same time, the state is working to see that Alaskans are trained for the kinds of jobs needed by industry.

“We are moving the needle in the right direction on Alaska hire,” Bishop said.

After the committee had discussed employment for half an hour, Sen. Cathy Giessel, R-Anchorage, tried to cut the discussion short and move the bill from committee.

“This has been some compelling testimony,” she said, but the bill had already been heard 26 times in the House and a similar bill five times in the Senate and didn’t need additional discussion in the Labor and Commerce Committee.

Sen. Betty Davis, D-Anchorage, objected to that argument.

“They might have had a hundred and some meetings on the house side, but I haven’t even been in the ones they’ve had over here,” Davis said.

The committee voted down Giessel’s motion, and will consider the bill again next week.

• Contact reporter Pat Forgey at 586-4816 or at patrick.forgey@juneauempire.com.

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