Oil company's ads oppose higher taxes

Some lawmakers say spots are misleading and call on ConocoPhillips to pull them

Posted: Thursday, March 16, 2006

ConocoPhillips is taking the debate over raising Alaska's oil taxes to the airwaves with the message that such a change would discourage investment and do other harm to the industry.

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Half a dozen men and women in office and street settings appear in two separate commercials saying they oppose additional taxes on the oil industry.

"I think the industry has been taxed enough," says one man.

The 30-second television spots that began running last week don't mention the tax bill, but they are airing while lawmakers are crafting the first round of changes to the legislation this week.

So far, committees were advised by economists to go with a higher tax rate and on Tuesday, the House Resources Committee said it would propose a system that increases taxes after prices reach $50 a barrel.

Lawmakers say the goal of the proposed net-profit tax structure is to earn more money at higher oil prices while not taxing the industry out of the Alaska market.

"Our concern is that there is not a balanced and reasonable approach here, but rather there seems to be more of a tax-and-spend approach," said Brian Wenzel, ConocoPhillips' vice president of finance, testifying Wednesday before the House Resources Committee.

Wenzel was speaking against key changes the members plan to make on the governor's oil tax bill.

The company supports the governor's proposal of a flat 20 percent tax rate. ConocoPhillips spokeswoman Dawn Patience said the commercials were aimed at opposing any tax increase above the governor's proposal.

Two Democrats sent a letter to the company Wednesday saying the ads are misleading and called on ConocoPhillips to pull them off the air.

"Conoco's current ads imply that Alaskans are receiving a fair share for their oil when they are not," the letter said, written by Sen. Hollis French, D-Anchorage, and Rep. Les Gara, D-Anchorage.

Lawmakers from both sides of the aisle have been grilling oil executives for opposing a tax increase while their companies are seeing record profits.

"Conoco's company reports also show the company earned more profit in Alaska in 2004 than in any other place in the world," the letter said. "This runs counter to the suggestion in your current ads that Conoco struggles in its Alaska operations."

Wenzel said the letter suggests that private-sector company profits are bad; that state government has not shared in the benefit of high oil prices; and that his company's commitment to the state is irrelevant.

"The antipathy towards the industry expressed in this letter is what concerns us most about the current debate on oil taxes," Wenzel said. "It has become for some an exercise in seeing how much the state can take from the private sector for no other reason than simply to take more."

Rep. Carl Gatto, R-Palmer, said the ads don't tell the other side of the story, which would be that oil companies are asking the state for more tax breaks than they need.

"I saw the television ads myself and I'm going to tell you what I thought. I said, 'That's dirty," Gatto said.

Gov. Frank Murkowski said after the new oil tax policy passes the Legislature, it will be locked into a contract with ConocoPhillips, ExxonMobil and BP to build a $25 billion pipeline to send natural gas from the North Slope to markets in the Midwest.

Producers are waiting for the oil tax bill to pass before they sign the contract so they will have certainty on their fiscal outlooks.

Murkowski spokeswoman Becky Hultberg said the governor has worked with ConocoPhillips through this process and understands the company's frustration.

"I'm sure this is the strategy we wouldn't have considered, but we respect their right to air their opinion in this way," she said.

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