[originally published in UAA’s The Northern Light]
Oil revenue. Alaska’s Clear and Equitable Share. Tax reform. Exciting stuff, right?
Of the issues affecting our local elections, few could have a larger impact on Alaska’s future than oil revenue. At stake is around $2 billion in yearly revenue for the state.
Why should you care? Because that’s $2 billion less to cover funding for state programs and projects that affect the day-to-day lives of the people you know and care about.
Special interest groups are pushing for this $2 billion giveaway by reducing taxes on oil companies. One of these groups, the Make Alaska Competitive Coalition, or MACC, says Alaska is overtaxing oil companies like BP, ExxonMobil, and ConocoPhillips to the point that oil production is declining.
At a recent press conference, MACC Co-chairman Jim Jansen said our current tax policy must be changed or “we’re going to be doomed — we’re going to fall off an economic cliff.”
MACC wants the Alaska legislature to reduce oil revenue to the state by $2 billion a year. I’m not sure who has been feeding horror stories to Jim Jansen, but last year, BP brought in around $26 billion — that’s quite the paycheck.
ExxonMobil brought in $41.1 billion in profits. ConocoPhillips brought in over $12 billion. Splitting an extra $2 billion amongst these companies isn’t even a drop in the bucket to their collective profits.
The oil industry isn’t going hungry. Jim Jansen, CEO of Lynden Incorporated, is under the impression that our only option is to give in to the demands of oil companies, or they will have no incentive to increase production and create jobs.
But here’s the thing: People are still going to want oil. Our national economy depends on oil, and Alaska has it. Most would agree that it’s easier to do business here, considering taxes and all, than in the Middle East.
We are a state of owners. The resources of Alaska belong to all Alaskans.
According to Article 8, Section 2 of the Alaska State Constitution, “The legislature shall provide for the utilization, development, and conservation of all natural resources belonging to the State, including land and waters, for the maximum benefit of its people.”
Our legislature has an obligation to ensure that our natural resources are being used to the maximum benefit of all Alaskans.
We need oil companies to extract and refine our oil, so it may seem like the oil companies should be calling the shots. But without our oil, these companies don’t have a product to deliver.
So when these companies come to our state legislators and claim that their taxes are too high, we should remember that these companies need our oil. When these companies ask for a change in their tax rate, shouldn’t we be able to ask that we get a guarantee of increased production? If we reduce the money we make from the oil companies who do business here removing a product from under the land we own, what’s in it for us?
In capitalist society, more money is given in exchange for a product — not simply the hope of said product at an undisclosed date sometime in the future.
When you hear about the oil revenue issue this election cycle, and you’ll hear about it again when our next legislative session starts up in January, keep this in mind: It’s our oil.
If oil companies wish to use it for their financial gain, they need to make sure we don’t get robbed in the exchange. They’ve already got a pretty good and profitable gig. We should keep the farm.