My Two Cents on Alaska's Oil Taxes

ABC came out with this article:

Gov. Sean Parnell said Thursday that he wants to give oil and gas companies greater incentives to do business in the state, a plan he says will boost production and create potentially hundreds of new jobs for Alaskans.

The plan comes amid forecasts of slumping oil production on Alaska's North Slope and concerns by some Republican lawmakers that a state tax on oil and gas production — passed two years ago at the urging of then-Gov. Sarah Palin — is doing more harm than good and hindering new development.

Nice little shot over the bow there, but keep reading...

A report released Thursday by the state Department of Revenue did not attribute industry woes to the tax; in fact, it found the tax was performing as expected.

Alas, all is not Sarah Palin's fault.

However, it did recommend ways the system could be improved to spur additional development, including expanding tax credits for drilling and well work costs.

Parnell said the recommendations strike a balance between protecting Alaska's interests and declaring the state open for business. While the state currently has billions of dollars in budget reserves, Parnell said its economy is struggling and he's trying to create more jobs and opportunities. The estimated hundreds of millions of dollars in additional tax credits are a small price to pay, he said, for a state that runs on oil and gas revenue.

He said he'd ask lawmakers, who begin meeting in regular session next week, to approve his plan.

Whether they do is anyone's guess.

It goes on to quote different lawmakers, including Ramras. Don't get me started on Jay Ramras. Jay Ramras is a tool for the big oil companies. He is the definition of tool, just so you know that every thing he says comes straight from the oil companies' butt.

The most important part for Palin supporters is the first bolded section. The most important part for Alaska is the second. I have no problem with this. Palin herself has said that some changes to the tax system are open for consideration. There is nothing wrong with that.

Here's the thing: The oil companies had Alaska over a barrel with Murkowski. Palin was able to take Alaska's power back and put the state in a position of strength. Because the state is now in that position of strength, negotiation is now possible. But no real agreements could ever be made while the oil companies had a choke-hold on the state.

You cannot make a fair deal unless the parties are in a position to look each other in the eye. Palin put the state in that position. Now it's up to Parnell to work out the details.

Nothing is ever finished with one politician or one governor. It is an ongoing and hopefully continually improving process. I have long said that the state will probably have to put in some predictability on oil taxes into AGIA in order for the line to get built (not necessarily the changes under consideration, just an example). The Palin administration originally put that into their plan in the first place, but the legislature took it out.

So shut your face, Dan Fagan, as I'm sure it's already wide open.

More specific details about Parnell's proposals can be found here.

He wants the state to suspend gasoline taxes again to help Alaskans.

He wants further studies on an in-state gasline.

Lawmakers have praised his proposals, but some are encouraging him to go even further. Bottom line - now that the partisanship that surrounded Palin after the election is gone, the state of Alaska is moving forward. Palin was right.