In the last forty-five years I have witnessed massive change here in the great state of Alaska. For the most part the change has been for the good. With development on the North Slope, strong markets for other natural resource development, a massive population infusion because of job creation, and a booming real-estate market, we witnessed the creation of a dynamite economy.
Barring any huge set backs in your life, being a financially successful human being was not rocket science. All you had to do was get a job, purchase a home, and watch your salary and property values soar.
So the big question today is will “ACES” make or break Alaska’s economy.
Today we are witnessing a decline in oil production. Oil makes up 80% - 90% of Alaska’s tax base, so this will obviously have ill effects on our state’s financial well being.
Fifteen to twenty years ago half the students in my class had parents employed by the oil companies. Today, it is one or two. This informal survey indicates that there has been a trend to downsize the oil companies’ roll in Alaska.
We know production is down to a dangerously low level. If this trend continues the pipeline will be forced to shut down putting Alaska in a perilous downward spiral.
Exploration has come to a standstill which strongly indicates that oil development in Alaska is not a priority when there are cheaper markets in which the oil companies can invest.
Will cutting back the “ACES” tax structure offer the incentives needed to lure the oil companies back to our state, particularly the progressivity factor that cuts all profit to the oil companies once oil hits the $136 dollar mark? Oil companies are all about making a dime, if adjusting “ACES” would allow that to occur, as it does in other parts of the world, I think Alaska may once again become the solid state that it once was. Cash is an incentive that motivates business. Oil is business, and we know that incentives matter. Is this the right incentive to save our state?
Take a close look at the north slope. In the very near future, it may indeed be a barren desolate land void of infrastructure, development, and prosperity. Can we afford not to forfeit some profit, so that our kids can enjoy the experience of living in the “Alaska” that we did?
Rick Farrell
YES! ACES needs to be reformed. This oil tax structure is the highest in our nation. It has eliminated the the incentive to invest in Alaska. Last year we had one exploratory oil well drilled on the North Slope. There is only one planned for 2011. We have only 12 working drill rigs right now. In contrast, North Dakota has 160 active drill rigs and demand for rigs exceeds supply. North Dakota legislators are asking themselves, "How can we lower oil taxes further to lure more oil investment". Our legislators need to ask the same question and pass something better than the current ACES tax structure.
ReplyDeleteWe Alaskans must first answer the question: "Do we want oil to continue to be extracted from our lands by entities other than our own state government?" If the answer is no, then leave ACES in place. The guest speaker from ConocoPhillips made it clear: If ACES remains the same, better offers for profit will drive them elsewhere. IF we want to take on the challenge of extracting that oil as a government operation, then leave ACES in place. (Why haven't we done that already if that were the case?) The market is telling us that the current structure will lead the business elsewhere.
ReplyDeleteAndranel
In an ideal world it would be wonderful if the state governmeent of Alaska could take on such an endeavor and turn a profit. I can only imagine the riches we would enjoy. I would guess Alaska would be self sufficient, no more taxes, and a quality of life like no other in the world. However the history of government run entities does not have a stellar track record. Sadly, over spending, greed, and corruption of the officials in power would most likely lead to the downfall of what could be our very own Alaskan Utopia.
ReplyDeleteRick Farrell