Hickel calls for oil tax plan

Former governor says oil industry has too much influence on Alaska government

Posted: Thursday, January 12, 2006

Former Gov. Wally Hickel says the oil industry has too much influence over Alaska's government, and called long overdue a plan to tax oil companies as long as Alaska's natural gas remains buried in the tundra.

Hickel, a two-time Alaska governor and President Nixon's Interior secretary from 1969 to 1970, testified in favor of a bill to tax North Slope oil companies $1 billion a year as long as they don't deliver natural gas reserves to market.

Sponsors of the bill, Anchorage Democratic Reps. Eric Croft and Harry Crawford, say the measure is a way to spur construction of a natural gas pipeline. If the bill doesn't pass, Croft and Crawford have a backup plan with a proposed initiative that also calls for taxing oil companies $1 billion a year.

Hickel said the suspicion has always been there that the companies are keeping the state's natural gas in the ground while they develop other reserves around the world. If the companies want to keep what could be more than $1 trillion worth of Alaska's resources off the market, they must pay a price, he said.

"A proposed $1 billion a year penalty should be a minimum. This is not a Johnny-come-lately idea, it's common sense," Hickel said. "And the only reason there's controversy over it is the undue influence of oil and gas producers in our governmental process."

Gov. Frank Murkowski is negotiating with ConocoPhillips, Exxon Mobil and BP to set fiscal terms that would allow a proposed $20 billion North Slope natural gas pipeline to move a step closer to reality. Negotiations, which have been ongoing for more than a year, resumed this week in Juneau after a holiday hiatus.

ConocoPhillips spokeswoman Dawn Patience said the company reached agreement on base fiscal terms with the state in October and is doing everything it can to move the project ahead.

"The gas reserves initiative does nothing to move this project forward and it sends the wrong message to any company interested in investing in Alaska," Patience said. "The natural gas resources on the North Slope have not been developed because of economics and the price which natural gas has been."

She declined to address Hickel's statement about the producers' sway over Alaska politics.

Rep. Bruce Weyhrauch, R-Juneau, did. The Ways and Means Committee chairman said there has always been the perception that the Legislature is too beholden to the oil companies operating in the state, but lawmakers' track record show laws that both favor and hurt the industry.

He called the gas tax proposal a "stick-in-the-rear" approach to develop a gas line on which he hasn't formed an opinion. He questioned why there has not been a legal challenge if the industry was not living up to its obligations to develop the gas.

More than 33 trillion cubic feet of natural gas reserves would be subject to the proposed tax. The tax would be repealed when a pipeline is built and the gas is brought to market, according to a fiscal analysis of the bill.



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