Governor's Proposed Oil Tax Dominates Juneau Conversation

The governor wants to roll back oil taxes by about $2 billion per year, which the Parnell administration hopes will foster investment and create more jobs.

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By Natalie Travis

Story Created: Mar 10, 2011 at 7:53 PM AKDT

Story Updated: Mar 10, 2011 at 7:53 PM AKDT

At a Thursday press conference in Juneau, the subject of Governor Sean Parnell's bill to decrease oil taxes dominated the conversation.

The governor wants to roll back oil taxes by about $2 billion per year, which the Parnell administration hopes will foster investment and create more jobs.

But some lawmakers say the bill is a massive giveaway of the state’s oil money to the wealthiest oil companies.

“At current oil prices, it's probably closer to $3 billion per year. It would mean massive losses to the state if we pass this bill,” said Sen. Bill Wielechowski (D-Anchorage) in a March 2 interview.

Governor Parnell said his plan to decrease oil taxes is necessary to keep Alaska competitive, and for the most part, Parnell claims there is not much to lose.

“They are saying we are giving up tax revenue with no guarantee of jobs. These are areas that haven't had any exploration or development ever. So, nothing from nothing is nothing, is my view,” said Parnell. “Basically, we are not giving up any opportunities, really, here in the new drilling areas.”

But one lawmaker says he's not convinced.

“We all want to see increased exploration on the North Slope. I am not convinced that the governor’s bill will get us that. The oil companies have refused to make any commitments to increase oil exploration. They have refused to make any commitments to increase exploration [and] refused to make any commitments to increase Alaska hire,” said Wielechowski in the March 2 interview.

However the governor said there is still time for more commitment.

“In field drilling, credits also require investment. Here in infield drilling, to get these credits, companies haven't made their decision yet because they make those on an annual basis,” said Parnell.

Some lawmakers claim, if the bill is passed, other Alaska projects will take cuts and Permanent Fund Dividends might be tapped to pay for them.

Parnell said he's assuming if the state lowers the taxes, oil companies will come in.

If they don't, Parnell claims the legislature can later reexamine the new tax rates.

One lawmaker said the numbers show not all oil companies are suffering under the current tax scheme.

“From the profit numbers that we know, and I would like to share the public reports that British Petroleum and ConocoPhillips are required to produce, that since ACES has been in place, British Petroleum over the last four years has taken in $8. 4 billion in Alaska profits,” said Rep. Les Gara (D-Anchorage).

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