Whether or not the oil and gas tax structure needs to be changed in Alaska is the talk of the town of Juneau once again.
According to Anchorage Democratic Senator Bill Wielechowski, the people of Alaska are not receiving the amount of profit from the oil industry that they should. The senator also indicated that he does not feel that the More Alaska Production Act – Senate Bill 21 – is helping enough to create enough more jobs. Nor does it provide more oil through the Trans-Alaska Pipeline System as it should.
As a solution, Senator Wielechowski penned his own bill, and pre-filed SB 129., which will only impact the three areas with the most profitable oil fields in the state of Alaska: Prudhoe Bay, Kuparuk, and Alpine.
The new bill by Wielechowski also makes provisions for additional taxes on major oil fields, as well as reducing allowable deductions, and doing away with the customary per-barrel credit.
It is finally time for a change, according to Wielechowski and also his constituents, who are requesting changes be made. Wielechowski is listening to what they have to say, and he agrees. The senator blames excessive tax breaks for oil companies for the large shortages in state revenue.
“We’re paying out these massive tax credits. We’re not getting a fair share for our oil. So with this bill, this would bring in $850 million to a billion dollars. This goes a long way towards closing our fiscal gap. It allows more money to be available to the people of Alaska for their PFDs,” Wielechowski said.
As one would assume, the oil industry was not on board with Wielechowski’s proposed changes in the bill. Kara Moriarty from the Alaska Oil and Gas Association wrote this in a statement.
“From our initial assessment, Sen. Wielechowski’s bill represents a massive tax hike on the industry – at least 300% at current prices. His 45-page proposal is highly complex and creates uncertainty and instability. If one is truly concerned about increasing production, jobs and revenue for the state, increasing taxes makes no sense,” Moriarty wrote.
It appears that change may be imminent concerning the oil and gas tax structure in Alaska. New bills are being written and there is even a group working for an oil tax change via a new voter initiative. The group has a deadline of January 21 to submit the required signatures to the Division of Elections for review.
