Trio of Fairbanks mayors swallow oil company propaganda without blinking

The Fairbanks News-Miner should try again with another lead story and opinion column to correct the false statements and dubious claims made by the three mayors from the Fairbanks area in what could have been an oil industry press release about the oil tax initiative.

The newspaper can start by correcting the false oil industry claims that the three local mayors accepted without blinking, information distributed by the front group financed by ConocoPhillips, BP, ExxonMobil and Hilcorp.

The oil companies, with their $20 million propaganda campaign, never admit that the Legislature can amend the initiative to deal with any real problems, including those the industry claims would be ruinous. All of the complaints about the initiative are exaggerated for effect.

Keep in mind, amid the weeping and gnashing of teeth, that the Flint Hills refinery was not driven to extinction by state oil taxes. The oil tax initiative is not a “massive” increase at today’s oil prices or projected oil prices. And in their drive to stop any tax increase, the oil companies are willing to say almost anything.

The four oil companies are bankrolling the opposition to the measure. To say, as the News-Miner does, that ConocoPhillips, BP and Hilcorp are the top three contributors is misleading. They, along with ExxonMobil, are bankrolling nearly all the opposition to the initiative.

In spending tens of millions to tell Alaskans how to vote, what the companies won’t confess is that at today’s oil prices, state oil taxes are nearly non-existent.

The SB 21 tax system that is in place today was not designed for an era with oil prices below $50. In fact, there was very little thought given to the possibility that oil prices would drop below $80 per barrel and stay there.

One of the reasons to support the initiative is that the state will confront the new reality on world oil prices.

The main impact of Ballot Measure No. 1, at today’s prices, is to raise the minimum gross severance tax from 4 percent to 10 percent on the three largest oil fields, not on new fields. This is hardly the end-of-the-world scenario that the four oil companies claim it is.

At $45 a barrel, the state would collect $191 million this year in severance taxes. That would rise to $564 million under the initiative.

For some perspective, the nearly $200 million the state stands to collect in oil severance taxes is about the same amount the state expects in total on sales of alcohol, tobacco, insurance, marijuana, the refined fuel surcharge, tires, gambling, and mining licenses.

You don’t see that in the oil company propaganda or in the spoonfed statement by the mayoral trio.

This is why the oil companies exclusively use percentages in their anti-initiative onslaught. Instead of saying the initiative would raise oil taxes by $373 million at $45 a barrel, the companies say it would be a 200 percent increase, which sounds higher.

For more perspective, the state collected $6 billion in severance taxes in fiscal year 2012, dropping to $4 billion in 2013 and $2.6 billion in 2014.

There are real questions about the state’s fair share that will never be examined by the Legislature because of the immense influence of the oil industry. This is usually behind the scenes, but it is on full public display now with the $20 million propaganda campaign.

Ballot Measure No 1 should be approved for no other reason than it is the only political mechanism strong enough to force the Legislature to include oil taxes in the fiscal plan the state needs to preserve the Permanent Fund and state services.