Alaska came into statehood with the constitutional provision that resources would be developed “for the maximum benefit of the people.” The present oil tax statute, from Senate Bill 21 in 2014, does not meet this provision. Indeed, Alaska received $1.6 billion less in 2014 for its oil than in 2013 because of SB 21, which only applied for six months of 2014; oil price and flow volume were similar in 2013 and 2014. The income gap worsened with time, and the state of Alaska now owes money to the industry. “For the maximum benefit of the people?”
Alaskans immediately made a strong attempt to repeal SB 21, but the oil industry defeated this by spending $20 million on advertising.
In 2020, “Vote Yes for Alaska’s Fair Share” tried to remove the most onerous parts of the SB 21 statute, including the per-barrel credits — aka “corporate welfare” — which require the people of Alaska to pay the industry $8 for every barrel of oil taken. The Fair Share group restricted its removal of per-barrel credits to the three legacy fields of Prudhoe Bay, Kuparuk and Alpine.
Again, the oil industry fought the proposition, known as Ballot Measure 1, on the 2020 ballot. The top three contributors to “Vote No” were: BP/Hilcorp, Conoco Phillips, and Exxon. The contributors to “Vote Yes” were Alaskans. The industry won; according to the Alaska Public Office Commission, it spent $20.9 million and Alaskans spent $1.7 million. So, the industry had 12 times more money to spend on advertisements.
Alaskans tried twice to repeal or modify SB 21 by public vote, but since the industry will always have much more money for advertising, it will always win such a contest.
Now it’s up to the Legislature to act. At a minimum, it should do two things:
1. Stop paying per-barrel credits.
2. Raise the royalty value of Alaska oil to equal that of Texas oil; it’s only half that now.Incidentally, there’s no royalty on oil from federal land such as NPR-A. State legislative action needs to increase royalties from state land, and basically tend to the store.
Gov. Mike Dunleavy says: “We must spend within our means.” That is hard to do when we give away our means.
— Carl Benson
Fairbanks
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