Time for oil industry and allies to make good on promises to examine taxes in the open and save PFD

Erec Isaacson, the president of ConocoPhillips Alaska, wasn’t living in Alaska in 2020 to witness the campaign for and against Ballot Measure No. 1 to raise oil taxes on the most profitable fields.

But after taking his current position a year ago, he gave this summary in speeches to pro-business groups.

“As an industry we went out and educated the people of Alaska about the importance of having a competitive oil and gas industry here in the state,” he said. “And so as a result of that we defeated Ballot Measure 1 by a 16-point margin, a huge margin.”

ExxonMobil, BP, ConocoPhillips and Hillcorp spent hundreds of thousands in staff time and at least $25 million on a “woe is me” PR campaign that paid off at the polls.

Since he wasn’t here, perhaps Isaacson doesn’t know about the central “educational” arguments made by the oil industry group, OneAlaska.

OneAlaska said that oil taxes should be decided upon by the Legislature out in the open and that defeating the ballot measure was a way to “save jobs and the PFD.”

The latter phrase was code for paying Alaskans higher dividends, always the lowest common denominator in Alaska political posturing.

There was no plan to push the Legislature to look at oil taxes in the open or to “save jobs and the PFD,” but endless repetition and money is the foundation of propaganda.

“This ballot measure goes too far. It is bad for jobs and puts our economy at risk. There has to be a better way for Alaska,” the oil companies said through their front group.

The Anchorage Daily News echoed this talking point about a “better way” in its vision for the 2021 session, calling on the companies to “come to the table and help hammer out a fair solution that doesn’t kneecap investment on the North Slope, but which also helps provide services essential to Alaskans.”

The initiative came about because the governor and Legislature blocked any real action on oil taxes for years. This has typically done in secret, out of public view. The oil industry has no interest in coming to the table.

The industry claims that any tax increase, even a small one, will be fatal to future prospects.

The Legislature hasn’t done much in 2021 or 2022 to really examine the weaknesses in oil tax law and fix them. Now that oil is close to $90 a barrel and the state is paying the maximum in oil tax credits to the oil companies—a rate that would easily top $1 billion a year—this failure is striking.

Sen. Bill Wielechowski introduced SB 106 and SB 107, both of which have been ignored. Rep. Adam Wool introduced HB 130, which is stalled. Sen. Tom Begich introduced SB 13, which has gone nowhere. Various other bills are stuck in committees.

Even Dunleavy allowed his revenue commissioner, Lucinda Mahoney, to say reducing North Slope oil tax credits by $3 and applying a corporate income tax to Hilcorp are “conceptual options” that could be worth a few hundred million. But the governor won’t support any options, conceptual or otherwise.

In a story published in the Alaska Journal of Commerce and the Anchorage Daily News the other day, Isaacson claimed the defeat of the oil tax initiative has already paid off: “Improving market conditions and voters’ rejection of the proposed oil tax increase in Ballot Measure 1 in 2020 led ConocoPhillips to put nearly $1 billion in capital toward North Slope projects last year after shutting down its drilling operations for much of 2020, according to Isaacson.”

There is reason to challenge the claim that the $1 billion in capital invested on the North Slope had anything to do with the defeat of the ballot measure. In presentations Isaacson made last spring, he said that the company has averaged $1 billion a year in North Slope investments over the past five years. So perhaps the $1 billion investment had no link to the fate of the initiative, but had everything to do with market conditions and the potential for future profits.

The governor and a majority of legislators operate on the dangerous assumption that what ConocoPhillips and the other oil companies want is what Alaskans need. Their lack of gumption is aided by the habit of Alaska news organizations to pass along corporate assertions without examination.

The oil industry promises in 2020 that the Legislature is the proper place to thoroughly consider oil taxes and that the industry will help save the PFD are all but forgotten. But it’s time for the industry and its allies to make good on them.

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