Alaska editorial: Facts in short supply in debate over oil taxes

Posted: Friday, April 21, 2006

This editorial appeared in the Mat-Su Valley Frontiersman:

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Just when it seemed the oil industry's campaign to win over the hearts and minds of Alaskans could get no more intense, industry has turned up the rhetorical heat.

While the Legislature grapples with proposals to overhaul the state's long-standing and absurdly generous tax structure for oil and gas, industry has dipped into its very deep pockets to mount a multimillion-dollar print, radio and television propaganda campaign designed to paint the industry as the innocent victim of a tax-crazed government. This should concern regular working Alaskans, because it is their very future at stake in the ongoing negotiations in Juneau.

Sadly, the Legislature, which constitutionally is charged with "development of all natural resources belonging to the state ... for the maximum benefit of its people," seems to be more concerned with appeasing industry than taking care of those they were elected to represent. Could it be that campaign contributions from industry interests are trumping the public good? What other explanation is there for the apparent ease with which a majority of legislators parrots baseless industry talking points?

The oil industry is fond of breathlessly pointing out that some in state government want to triple the existing tax. Sounds awful, huh?

What industry insiders and their shills in the Legislature neglect to also point out, however, is that even if the tax were tripled and combined with the federal tax share, Alaska still would be the lowest-taxing oil producer in the world. Industry profits might not continue to be quite as obscene as they've been over the years here at the expense of taxpayers, but profit margins still would be much higher than they are anywhere else.

While the governor, Legislature and industry haggle over whether the new tax rate should be 20 or 25 percent, a recent state Department of Revenue analysis showed that even if an oil tax rate as high as 30 percent were adopted, under the reforms currently on the bargaining table, North Slope producers still would earn staggering profits next year.

Does this sound like a plan that is for the "maximum benefit" of the state's people?

Considering the growing burden on regular Alaskans in the form of rising property taxes, crumbling or inadequate infrastructure, and loss of municipal assistance and the longevity bonus, are Alaskans really getting fair market value for their oil when, around the world, industry pays on average 80 percent and more of revenues to the host government?

Consider this: According to profit statements from ConocoPhillips, one of the three major oil companies working in Alaska, the firm earned more profit here in 2005 than in any other region in the world. Additionally, while most large corporations claim profit margins near 15 percent, Conoco's profit margins, under both high and low oil prices, have ranged between 29 percent in 2002 to more than 40 percent in 2003 through 2005.

We have nothing against profit. As a private business, we understand bottom-line concerns.

But we also understand the value of our resources on the world market. It is time for all Alaskans to ask their legislators if they do.

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