Alaska Senator Attacks Oil Companies with Tax Increase Legislation

March 28, 2023

Anyone who has followed Alaska politics for any length of time knows State Senator Bill Wielechowski (D-Anchorage) is an unabashed and unapologetic anti-oil legislator.  Even though his primary job is a labor union attorney, and many of the hands his union represents are industry workers, Wielechowski shows no love for those employers.  Every two years, one can expect Wielechowski to introduce some piece of legislation designed to punish Alaska’s leading private-sector employer.

So when Senate Bill 114 was introduced last Friday, with Wielechowski as the prime sponsor, it wasn’t a shock.  What drew attention was the veracity of the penalties for producers should it pass.  According to a story in the Anchorage Daily News, it would provide for:

• A reduction of oil tax credits from $8 to $5 per barrel. Under last year’s daily production of 438,000 barrels, the state could expect to collect more than $400 million. The credits would also be capped to the amount of capital expenditures made by oil producers, which has a difficult-to-determine revenue impact.
• An adjustment to corporate income taxes paid by oil companies. Privately held companies would pay the same 9.4% income tax rate as public corporations. Hilcorp, which operates the Prudhoe Bay oil field, does not pay corporate income taxes as an “S corporation.” That proposed change would only apply to companies that make more than $4 million per year. The tax adjustment is estimated to raise an additional $139 million.
• Implementation of “ring fencing” on North Slope oil fields, which would limit how producers offset exploration and production expenses from their overall tax production bill. That provision would impact ConocoPhillips’ Willow project and prevent the Texas-based oil giant from reducing some of its tax obligations until it started to produce oil. Tax experts said it would be difficult to estimate the precise revenue impacts of those changes.

There is scuttle around the Legislature that Wielechowski’s bill has a decent chance of passing the State Senate, but little chance of passing the House.  The issue with one body advancing it, however, is that the anti-industry, anti-development zealots can use the Senate’s approval to springboard a ballot measure for the 2024 election, designed to draw eco-centric voters to the voting booth, in hopes of damaging oil companies’ incentive to continue to responsibly develop oil and gas in the Great Land.

Here’s hoping nothing happens with this grotesque attempt at punishing Alaska’s leading employers, corporate citizens and philanthropic partners.  Alaska’s already under attack from Outside ideologues and radical environmentalists, and their minions in the Biden Administration; it doesn’t need state legislators taking pot-shots from inside its borders as well.