The politics of oil

Posted: Wednesday, February 20, 2002

In 1974, Saudi established "OPEC-terms," an oil tax-rate equaling 80 to 85 percent of profits. In 1998 Phillips paid $250 million for drilling rights in Kazakhstan. Their contract allows Phillips to keep about 17 percent of profits. Kazakhstan keeps about 83% percent.

Alaska's Prudhoe Bay severance tax-rate is 15 percent and Alaska's royalty is 12.5 percent. The feds take 24 percent.

All other government charges combined, our oil companies keep about 43 percent of profits from the sale of our oil. Over twice what they accept in places with higher risk.

Over the last 25 years, Kuwait produced about the same amount of oil as Alaska.

Even though Kuwait has 350,000 more citizens than Alaska, each Kuwaiti receives between $10,000 and $16,000 in annual dividends and Kuwait's Permanent Fund is 10 times bigger than ours. All from a similar amount of oil!

What's wrong with this picture?

People owing their political existence to oil companies dominate our Legislature.

They are planning to raise your taxes and cut your services and to balance the budget; unfortunately, there isn't enough money in the pockets of Alaskans to balance the budget.

Alaska could double its income from oil by managing our resources in a manner consistent with world markets. If we don't, this state is destined for bankruptcy.

If we start before the oil runs out, we can grow our Permanent Fund to the size necessary to continue to pay dividends and fund government from its earnings.

But it won't happen unless we deliver the message. Tax oil not me!

Ray Metcalfe

Chairman, Republican Moderate Party


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