Since its beginnings in Alaska in 1953, Lynden has grown into a successful international transportation business. We owe it to the hard work and dedication of hundreds of current and past employees, a vibrant Alaska economy and our dedicated customers.
But how long do you suppose we would have stayed in business if our prices were double those of our competitors?
Unfortunately, that's exactly what Alaska is doing to its biggest "customers." Since it was adopted in 2007, Alaska's Clear & Equitable Share (ACES) oil tax system has priced Alaska out of the market for oil industry investments that are the lifeblood of our state's economy.
Alaska's petroleum industry has allowed Alaska to grow and pay Permanent Fund dividends, and funds 90 percent of our cost of government.
Alaska has prospered.
That all changed in 2007 with the passage of Alaska's Clear & Equitable Share oil tax system (ACES), during a time when the Bill Allen / Veco corruption and the glamour of Sarah Palin motivated Alaska to punish the oil industry by legislating a progressive oil tax structure that is the highest in nation. This punitive oil tax eliminated the incentive to invest in Alaska.
Exploration and new development began to slow and production and drilling have dropped dramatically. We must reverse this tax policy and get back to finding new sources of oil.
Alaska is no longer competitive with other oil provinces and our primary revenue source is drying up.
At current oil prices, our government takes almost 90 cents of every $1 in oil company profits through taxes and royalties. Compare that to 55 cents in Alberta, 43 cents in the Gulf of Mexico and even less in other oil regions.
Under those terms, where would you invest? Would you do your "shopping" in Alaska, or would you take your money elsewhere?
With oil prices over $100 per barrel, Alaska should be booming, like other oil regions around the country and around the world. It's not. Instead, we have falling production, fewer oil industry jobs and almost no exploratory drilling or new development.
There's very little engineering or seismic activity in Alaska, a strong indication that the oil industry is not planning to invest here anytime soon. Most capital spending is on routine production drilling and maintenance, and there's very little being done to get new oil into the pipeline.
The declining oil flow in the pipeline troubles me most ... 7 percent in 2010 alone. We all know what happens to our state if the flow of North Slope oil falls below the economic and physical capacity of the pipeline, and we're rapidly approaching that threshold.
We'd prefer to stay in Alaska and keep the jobs and our own investment here, but the oil industry investment is taking place elsewhere. We have no choice but to go where the opportunities are, or we'll be out of business. We are moving truck equipment to North Dakota. We have relocated one of our Hercules aircraft to Papua New Guinea and plan to move another to Peru where the oil companies are investing.
If you're planning to leave the state within the next five years and don't care what happens to Alaska, the current punitive tax policy is just right for you. Live for today, and leave tomorrow's problems to others.
But if you want an economic future for our state -- for our employees, for our children and our grandchildren -- it's time to fix ACES and create a climate that brings investments back to Alaska.
New investments have long lead times, and the time to act is now. With jobs vanishing by the hundreds, the trans-Alaska pipeline two-thirds empty and rapidly declining, and Alaska's economic future at stake, our leaders can't afford to take a "wait-and-see" or do-nothing approach. The harmful impacts of ACES are already obvious, and they'll only get worse with time.
Alaska must regain its reputation as a fair, stable, and commercially viable place to invest -- today. We must act right now, before we price ourselves out of business.
Jim Jansen is CEO of Lynden Inc., an Alaska transportation company, and co-founder of the Make Alaska Competitive Coalition.
By JIM JANSEN