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Chamber lunch becomes arena for oil tax sparring

Supporter, opponent of oil tax repeal effort square off

Posted: July 10, 2014 - 11:06pm
Former Anchorage Mayor Rick Mystrom, right, and local economist Gregg Erickson debate Ballot Measure 1, the referendum to repeal the Oil and Gas Production Tax, during the Juneau Chamber of Commerce luncheon at the Juneau International Airport on Thursday.  Michael Penn | Juneau Empire
Michael Penn | Juneau Empire
Former Anchorage Mayor Rick Mystrom, right, and local economist Gregg Erickson debate Ballot Measure 1, the referendum to repeal the Oil and Gas Production Tax, during the Juneau Chamber of Commerce luncheon at the Juneau International Airport on Thursday.

The Juneau Chamber of Commerce’s weekly luncheon was much more crowded than usual Thursday with one of the state’s hottest topics on the agenda. The issue up for discussion? The “More Alaska Production Act” or “The Giveaway,” depending on which side you ask.

The chamber’s board invited representatives from both sides of the SB21 repeal effort — aptly named the Vote No and Vote Yes campaigns — to state their cases to many of the capital city’s business leaders. During the state primary election next month, voters will be asked in Ballot Measure 1 whether they want to repeal an oil tax cut approved by the Alaska Legislature in 2013.

The chamber’s endorsement was not at stake — its board approved a resolution supporting SB21 back in February — but the opinion of Juneau’s business owners was up for grabs. On Thursday, both presenters urged employers to talk about the issue with their employees.

Gregg Erickson with the Vote Yes on 1 Campaign spoke first. The Vote Yes side wants to repeal the oil tax law.

Anticipating a point to be made by his opponent, Erickson unexpectedly started by openly endorsing the claim that SB21 will lead to more oil production on the North Slope.

“It’s clear: when we reduce our taxes on the oil companies, we’re going to elicit more investment. More investment is going to produce more oil, but that’s not the question,” Erickson said. “The real question is, ‘Is it going to make Alaska better off?’ The answer is just as clear ... The answer is no.

“It will not benefit Alaska,” he added.

That’s because the increase in production is not enough to offset the decline in tax revenue, he said. SB21 cuts Alaska’s total oil revenue — at oil prices currently being forecasted by the Alaska Department of Revenue — by 11 percent. The state expects production to rise by only 4 percent, Erickson explained.

“Do the math — an 11 percent cut in revenue plus a 4 percent increase in production — that leaves us 7 percent in the hole,” Erickson said, “and that’s 7 percent of state petroleum revenue that can’t be used for stimulating diversification of our economy, for taking care of social needs or for providing for education.”

During a question-and-answer session following both presenters, a local businessman said directly comparing a decline in revenue with production was “comparing apples and oranges,” but Erickson disagreed, saying it was essentially the same thing.

Rather than focusing his presentation on economics — such as increased investment and busy sub-contractors in Fairbanks and Anchorage — former Anchorage mayor Rick Mystrom of the Vote No campaign instead promoted the state’s working relationship with Big Oil.

“This is the richest state per capita in the history of America, and so I don’t think anybody can say it hasn’t been a good partnership,” Mystrom said. “It’s helped us all — it helps us all every day.”

The potential of that partnership is at risk this August, Mystrom said.

“How could anybody invest in their business long term if their biggest expense (taxes) went up and down six times in 10 years?” Mystrom said. “You can’t do it.

“If the ‘yes’ vote prevails, I can tell you oil production will continue to decline,” he added shortly after.

He referenced conversations he’s had with architects across the state about how large projects have been put on hold until Aug. 20 — the date after the primary election.

“Those projects will not restart if this vote passes,” he said.

Both presenters said the other side’s name for SB21 — “The Giveaway” to its opponents, and the “More Alaska Production Act” to its supporters — is nothing more than a sales pitch to Alaska voters.

Opponents of the repeal have said that without SB21, investment could be lost and projects shut down. Erickson called that rhetoric a “campaign of fear.”

Mystrom said the “giveaway” notion being advertised by opponents is purely fictional.

Ultimately, Erickson’s message focused on a distrust of Big Oil and a need for diversifying Alaska’s economy — both within the petroleum sector and outside it — and Mystrom keyed on the potential if the state stops changing its oil tax structure.

• Contact reporter Matt Woolbright at 523-2243 or at Follow him on Twitter at

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Bill Burk
Bill Burk 07/11/14 - 07:20 am

VOTE YES! We do not need to play into hands of Big Oil! They are making money hand over foot, and will continue to do so. Fracking will not be here for long, and our iol all again be needed.

Tim Miller
Tim Miller 07/11/14 - 08:16 am
The oil industry already

The oil industry already receives $2.4 billion-per-year in tax breaks from Congress

"The largest of these special provisions allows these companies to qualify for the “limitation on section 199 deduction attributable to oil, natural gas, or primary products,” which will cost taxpayers $14.4 billion over 10 years, according to the Congressional Joint Committee on Taxation"

In 2013 the oil industry hauled in over $93 billion in profits and yet now oil companies are lobbying to lift the crude oil export ban, which would enable them to sell OUR domestic oil to the world.

"The CEOs of these five oil companies (BP, Chevron, ConocoPhillips, Exxon Mobil, Shell) had a combined compensation of $96 million in 2012, the last year for which data are available, or nearly $20 million per CEO. This is nearly 400 times greater than the $51,107 median income for a family of four during that same year. These five major oil corporations also spent $45 million on lobbying in 2013; every $1 spent on lobbying helped the companies protect $53 of their tax breaks—an outstanding rate of return".

"In addition to receiving unjustified tax breaks, the big five oil companies also benefit from the lack of federal limits on carbon pollution generated by oil and gas production, transportation, and refining. The Environmental Protection Agency reported that “petroleum and natural gas systems” and refiners were the second- and third-largest sources of carbon and other climate pollution among the major industrial sectors that must report their emissions. Since there are no federal limits on this pollution, American families and businesses must bear the costs of more climate pollution, such as damages from extreme weather events, heightened smog, and tropical diseases. These—and other—oil companies can dump their carbon and other climate pollution in the sky for free. And at our expense."

Repeal repeal repeal = Vote Yes on measure 1
It is also time to get rid of Sean Parnell on Nov 4, 2014

Caroline Hassler
Caroline Hassler 07/12/14 - 07:55 am
Editing note: Elicit not Illicit

"when we reduce our taxes on the oil companies, we’re going to illicit more investment"

Bill Burk
Bill Burk 07/12/14 - 08:01 am

Get grip! The oil companies have NO other choice than to invest more in Alaska. The Fracking in the Lower 48 will NOT be lasting investment. Do you realize that ALL the adds of TV about voting NO are being paid for by the oil giants. They want the lower taxes ONLY so they can make more profit off of our oil then they presently make

Caroline Hassler
Caroline Hassler 07/12/14 - 08:05 am
Only pointing out a typo

Just pointing out a spelling error. The word used was Illicit, which is an adjective meaning illegal. What was intended was elicit, which is verb meaning to obtain.

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