My turn: Gas tax, contract make-believe

No matter what lawmakers do, consumers will pay the price

Posted: Tuesday, July 18, 2006

There is an old adage, "Follow the money ... connect the dots." Common sense and simple finance tell you that whatever the gas tax, it will not eventually be paid by the oil companies. If they do, they should fire their incompetent accountants and lawyers immediately. It will be passed on to consumers, with interest.

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This from an industry drowning in profits from high oil prices, that doesn't pay for past damage, an executive that gets a $400 million retirement package, they tell you to use less oil but remind you that alternatives are bad, and an administration that sends out public paid propaganda "fact" booklets during a primary election campaign after years of playing a secretive and arrogant bully. Sounds more like a comedy routine.

No matter how condescending the misinformation campaign, or how often the good-cop/bad-cop advertising is repeated, or how many pro-oil provisions and distractions by the administration, or speculative, untested legal arguments on approval, the consumer down below who buys the gas will pay the tax.

Oil companies will charge whatever they can get for the product. You think they're going to lower the price if they didn't have to collect a tax?

All money can be "allocated" just about anywhere, with great precision. The gas tax is no different. Further, net profit taxes are the playground of accounting chicanery.

Oil companies stay here, because the product is here. Many other places in the world simply have too high a risk premium for the rampant political instability.

I don't have a problem with oil companies making exceptionally high returns; it's a risky business. Nevertheless, what matters is what we, as the owner state, are rightfully, legally, logically, common sense-wise, entitled to - not what helps out those who will seek out future lucrative industry jobs, contracts and campaign contributions.

Any Finance 101 student can calculate what a steal a three decades lock on taxes would be. With relatively no penalty for non-performance.

Do you think the Saudis let the oil companies act like this? The Saudis effectively use our military protection for their oil fields, and to remove their competition - and then charge us even more in the oil prices as the treat diminishes. If it weren't so pitiful it would be humorous.

The supposed "expert" opinion on contract approval may provide some fence sitters a strategic reason to cop out, but it's hardly conclusive or tested. Any such move would be intensely litigated, and that will tie up any resulting contract.

Does the Republican Party really want to be known as the party that sanctioned that approach? If the party wants to commit political suicide in this election year, be my guest, but I think there are clearly better choices.

Alaskans also have a choice to make: Either the gas tax is set at the proper rate, and the state gets a proper pipeline contract, or we pay for schools, roads, services with higher personal taxes and the eventual use of the Alaska Permanent Fund. That's the realistic long-term economics of Alaska. Less overt hypocrisy by private businesses that also live off of government in Alaska would also help.

I am not BP, ConocoPhillips or Exxon; I'm not against them either. Alaska First is still the best long-term approach - for the oil industry and Alaska. There is a positive middle ground for the industry and Alaska, but the administration tax proposal and contract are definitely not it.

It would further be the height of irresponsibility to pass a contract and tax when billions, per year, hang in the balance - just because an election is near. The recent gargantuan capital budget shows there is no immediate fiscal crisis; although we probably will get continued lectures on the supposed "fiscal gap." If it so was important, why wait until the end of an administration and insist on secretiveness, conceit, bullying, arrogance, and waiting until the last minute, as the main battle plan?

It's up to Legislature. In this month when we celebrate our nations' independence, are they going to act to keep Alaska a sovereign state, with proper advocacy to get Alaska a just return for it's resource extraction revenues and contracts; or are they going to agree to let us be treated like a colony?

• Juneau resident Anselm Staack is a certified public accountant and an attorney, who teaches accounting and private or public financial management subjects for the University of Alaska Southeast. These views are his own.



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