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Vote ‘yes’ on Proposition 1 SB 21 good for oil companies, not so good for Alaska’s future

Posted: July 2, 2014 - 3:52pm

One of the things I like best about Homer is that friends can disagree and remain friends. A friend of mine wrote last week’s Point of View in support of SB 21, the oil tax give away. It read like a BP press release, full of unsupported statistics and misleading facts. He could not be more wrong.   

First, consider the source. His wife’s family has directly benefited tens of millions of dollars servicing the oil industry. What is good for the 1 percent is good for the fat cats in London and Houston. It is not good for working Alaskans who depend on taxing our oil, located on state lands, to fund our schools, build our roads and pay for our government.   

I am voting “yes” on  Proposition 1, to repeal SB 21, the oil tax give away.  Here are some facts:

The oil industry is spending $10 million to defeat Proposition 1. Don’t be confused by the hype. They are not spending $10 million to defeat Prop 1 because it is revenue neutral. They stand to benefit many billions of dollars under SB 21. 

This money, dollar for dollar, comes out of the pockets of the citizens of Alaska.

The Goldsmith report was financed by an Oil Industry Alliance member. The data used was never audited. The main problem with this report is that it failed to look at different pricing scenarios. The troubles in Iraq have driven up the world price of oil without corresponding benefit to Alaska. My Harvard BA in economics tells me to pay it as much heed as Exxon scientists denying climate change. Garbage in. Garbage out.

Under Alaska’s Clear and Equitable Share (ACES) oil production tax methodology, the state accumulated more than $17 billion in savings. while investing in new schools, roads and other critical infrastructure. This year, with SB 21, the state faces a $2.3 billion cash shortfall, with endless deficits on the horizon, according to the Alaska Department of Revenue. 

In five to seven years, our savings will be gone. There will surely be calls to reinstitute a state income tax followed by attacks on the permanent fund. My friend is asking you to not tax the richest companies in the world and instead tax yourselves because an income tax is inevitable under SB 21.

At no price point does ACES take 90 percent of the profit. This is a lie the “no” coalition keeps repeating but it simply is not true. A marginal tax rate is not the tax rate. ConocoPhillips makes $28 per barrel in profit in Alaska, almost three times higher than profits in the lower 48. BP provides other countries with the same services for 2 percent share of the net profits but gets 28 percent of the net in Alaska. 

One of the biggest lies the “no” cartel is pushing relentlessly is that SB 21 is a jobs bill. It is an anti-jobs bill. Under ACES, oil industry employment increased from 10,850 to 14,150, an increase of 30 percent in seven years.

In our current fiscal shape, Alaska spends every dollar we are making in oil taxes. That money hires our teachers,  pays for infrastructure and funds government.  Every dollar has a multiplier providing more jobs for Alaskans. Under ACES, spending on public works projects provided jobs for an estimated 125,000 Alaskans. As our revenue dries up and our savings are spent — these jobs will be the first to disappear. 

A dollar in tax goes 100 percent to Alaska. A dollar in oil company profit may result in some Alaska investment; or it may not, because there are no guarantees written into SB21. Historically, Alaska has been a huge cash cow funding projects everywhere but here. Conoco recently completed a 555-kilometer gas pipeline and gas liquefication plant in Australia, mostly with profits earned in Alaska. Tokyo Electric and Gas is the market.

What few jobs that may be created will be more than offset by the jobs lost. Anyone who has ever ridden a shared services flight south from Prudhoe Bay knows that oil patch jobs are illusory as half the plane bolts for flights outside, never leaving the Anchorage airport and leaving none of their wages in state.

As the state goes broke, SB 21 will cost us thousands of jobs. Teachers, municipal workers, state workers and construction workers will all lose jobs as the state goes broke. Hire an outside oil worker and fire a teacher or three. How do they spin that as a jobs bill? 

Hundreds of Alaskans donated our time to gather 55,000 signatures to repeal SB 21. I stand with Gary Stevens, Paul Seaton, Vic Fischer, Jack Roderick and the 55,000 people that signed the petition. I am voting “yes” because it is good for Alaska.

Aug. 19 is the vote. Early voting starts Aug. 4. Vote early and vote often. By that I mean get a friend to the polls. If every person who signed the petition gets a friend to the polls, “yes” wins.    

For more information visit “itsouroilalaska.com”.  Get the facts free from oil company spin.

Brad Faulkner worked on the trans-Alaska pipeline as a laborer. He writes: “Over the years I have worked a number of jobs in Prudhoe and Kuparuk. 2012 was my most recent stint, as an oil spill response boat captain supporting Shell Oil. I am not opposed to the oil industry.  I would just like to see Alaska get its Clear and Equitable Share.” 

 

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