Tim Tilsworth

Anchorage, AK

#1 May 27, 2011
FACT CHECK: Oil tax – again!

There has been media misinformation regarding Governor Parnell’s oil tax legislation. The Make Alaska Competitive Coalition (MACC) supported Parnell. However, they “may have oversimplified and/or misinterpreted the survey results and the degree of negativity it reflects on Alaska”(Legislative Research Services Report 11.245, 3/29/11), and they may have acted unethically (Neil Davis,“Dose of Reality,” The Ester Republic, April-May/2011). Nevertheless, the Fairbanks Daily News-Miner (FDNM) editors and the Fairbanks Chamber of Commerce joined MACC in supporting Parnell’s proposal.

Some clarifying facts are in order.

ACES (Alaska’s Clear and Equitable Share) is working and generating more revenue than PPT or ELF. TAPS is predicted to operate above 200,000 barrels/day until 2039 – not including new production. The ACES effective tax rate, after tax credits and industry costs, is about 28% at $101/barrel (Alaska North Slope West Coast, 5/25/11). Alaska has generous tax credits for the oil industry, and capital spending and drilling have increased under ACES. Industry employment is level or slightly up (Alaska Department of Labor, 4/22/11); unfortunately, industry employment for new hires is about 50% non-residents. Exploratory wells are down, but this could be due to yearly variations or use of advanced production technology. New North Slope developmental wells averaged 145 per year between 2006 and 2010, peaking at 164 in 2010. The Alaska Oil and Gas Conservation Commission reported 13 operational rigs on the North Slope (5/10/11), which contradicted the FDNM’s report of five working drill rigs in Alaska (5/12/11).

Some will challenge these facts - but they are verifiable. Alaska is behind in auditing the oil industry and should not adjust ACES until all the facts are known.

Alaska should support exploration, development and production of oil - but not at a $2 billion giveaway. ACES needs fine-tuning for the maximum benefit of Alaskans – not the oil industry.

Tim Tilsworth

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