“Here We Go Again” – Group Pushes Alaska Oil Tax Increases via Initiative

“Here We Go Again” – Group Pushes Alaska Oil Tax Increases via Initiative

August 22, 2019

From pre-statehood to present, Alaska has wrestled with the question of ‘how much is the right amount?’, with regard to oil tax percentages.

There have been an incredible 13 changes to the state’s oil and gas taxation structure since Alaska’s giant Prudhoe Bay field first came online in 1979. Some were driven by new areas of development, such as when oil and gas were discovered in Cook Inlet, and a new section was inserted to tax that production differently than the North Slope.  Some were driven by politics, where additional (or fewer) percentages were levied in order to raise state revenues.

Now, a group is looking to change things once again.

Calling their effort ‘Vote Yes for Alaska’s Fair Share’, and headed up by big-government advocates who have long histories of fighting (and suing!) Alaska’s oil and gas companies, they launched a voter initiative on Friday, August 16th.

While this group says they only are targeting the legacy fields – where increases of up to 15% could be realized on gross production taxes – in reality, it would affect any of the newer fields, once they met production minimums set forth in the initiative.

With Alaska’s economy just coming out of a recession, and with state revenues already tied significantly to oil and gas extraction results (nearly 70% of state revenues in 2018 were forecasted to come from the industry), many question the timing and feasibility of asking for more from the industry.

Power The Future will be watching this closely, as it is quite possible that the net effect of this battle will be a decrease in jobs in both the near- and long-terms, as the oil and gas industry spends money to defend its position; money that otherwise could go to investment and/or human capital.  Any decrease in employment – from an industry that directly and indirectly is responsible for one in every three private-sector jobs – would damage Alaska’s already-fragile and on-the-mend economy.