On my first trip to Ak, Alaska was booming; Pipeline, drilling, and then instead of getting gas to Fairbanks, things died except for maintaining the tax collection. Today, our people in Juneau, are again Hoing and Humming about building a pipeline to the Peninsula and servicing fairbanks. They have spent the whole session and have done nothing, while there should be plans in the work to start construction 'ASAP' on the small line, One consolation if it is built would be that our "Pols" would at least taking care of 90% of the residents by providing gas for the future; The Major oil companies will not build, I know; I worked most of my life for one. My opinion; Thank you; Paul D. Morrison
Like they have anything else to do and like they would do anything anyway. The legislator has done nothing in years why would anyone expect them to do anything now. Same guys get voted in every session, do nothing and the cycle repeats. Makes me wonder how they do it. In-fighting, arguing and sitting is what they do best but why do they continue to get elected??
I said no, because thats what i would do in reguard to lowering the tax for Big Oil. It's OUR, as in WE THE ALASKANS Oil & Gas, not the oil companies.
It costs them absolutely nothing to drill these oil wells, it's all paid for by the first few they drilled, everything after is pennies due to the major profits they have made off OUR Oil & Gas.
I would say let the Big Oil have it's going out of business, and don't let the border gates slap you on your way out.
Help WE THE ALASKANS with cheaper oil & gas prices, instead of the Big oil money hungry exec's.
But thats just me and what this 37+ yr Alaskan would do.
The representation we have in Juneau is horrible. Chenault said so himself when he said "there's a good chance this will be left for the next session." Next time the campaigns begin, ask them what legislation they introduced, co-sponsored and PASSED. They'll have loads of examples for the first two, but nearly nothing for the one that means anything!
As for Mr Baty's post, it is apparent he knows very little about the oil industry. He has no clue as to the proportional debt incurred by the cost of permitting, insurance, logistics and a plethora of other expenses. The cost of one new hole in an established field in Prudhoe Bay is running at about $12.5 million from permit to production. An exploratory well (which may not strike oil) averages four times that cost to drill and depending on where the new field is located, millions and millions more to bring it to established infrastructure. Do they make a ton of money as corporations? Absolutely! Is there product in worldwide demand? I believe so! Can we do without it? Nope, not anymore! Do they make a ton of money on the slope? Today they make a reasonable profit, tomorrow is uncertain.
KK my comments about very little cost incured by Big Oil has nothing to do with my understanding of the oil industry. But as a 37+ yr Alaskan that has known many people it does in fact have to do with many friends & associates that are associated with oil exploration & drilling and have shared with me their knowledge of costs & profit margins, all of which has made them understand & know whats going on with the continual raping of consumers with high prices at every level of the need for oil or gas.
As i have said before in reguard to the many oil wells that are capped and waiting until a situation arises where the Big oil can reap out astromomical profits does exist & regulated by greed, not a shortage of OUR natural renewable resource of oil by these Big oil companies.
I guess my friends that work in the industry just don't know what they are talking about either so i might not want to quote them anylonger, is that what your saying?
I promise you that if Alaska givews the Big oil what they want in reguard to tax breaks that OUR oil will start flowing non-stop to Valdez. I do hope that i am never proved correct in this, as it would mean the raping has gotten worse & aided by those that we elected to serve WE THE ALASKANS, not Big oil.
Have a GR8 day.
I'm not saying your associates don't know what they're talking about. I know for a fact there are hundreds of capped wells in Prudhoe. Most of them are misses, some are future injectors. I have been involved in the North Slope on and off since 1979 in different capacities and I am not aware of any "plan" for waiting for the price to rise to gain astronomical profits. By your very own logic that simply does not make sense? If oil is renewable, why would they wait to produce more? Aren't they afraid of overflowing the reservoir? Or are they planting oil seeds? Please site the source of your information in regards to oil being a renewable resource. I would find it interesting to see what information your sources have to contradict years of geological research. I've seen research into deeper wells closer to a heat source that is non biotic, but that does not make it renewable.
The oil companies nor OPEC set the price of oil. Currently, the market is flooded with oil, but the price continues to go up. Why? Speculation possibly? Could it be that there are more players (India and China) that are vying for oil and are in competition for the supply? The commodities traders? Refineries are closing due to margin issues and sales bottle necks (lack of demand), but gas prices are going up. We are no where near capacity in terms of refining. As a matter of fact, we have been exporting refined products for years with gasoline and diesel being at the top of that list.
Take note of what has happened in the inlet with natural gas reserves. I remember the plant manager at UNOCAL saying drilling incentives were needed to sustain gas production to keep utilities and industry operating. We poo poo'd that too ... until it was to late. Now we have loads of gas, but no infrastructure to deliver it to market. NOW the incentives are rolling out, but the demand is not there as a 80 bcfy industry has closed. (industry consumes a greater portion than utilities).
And finally ... your statement: "I promise you that if Alaska givews the Big oil what they want in reguard to tax breaks that OUR oil will start flowing non-stop to Valdez." THANK YOU!!! I think that's the point! You need to talk to your friends more about the objective of reduced tax obligation as an incentive to add infrastructure and start harvesting the hard oil. By the way ... the oil already flows nearly non stop... at the rate of a little better than 1/4 of pipeline capacity and falling.
I am an Alaskan Resident. Graduated from KCHS. I am raising my kids here as well. Jerry, what you don't understand is this: WE ALASKANS need the oil and gas producers to keep investing their dollars in this State. It's really pretty simple. Oil and Gas companies DO NOT SET THE PRICE OF GAS OR OIL. They drill, extract and pump downstream to refineries who then refine and transport to market, wher OPEC sets prices. I work on the Slope and have for 7 years. The money I make is spent in Alaska. Furthermore, let me ask you this: if you knew you were going to hold 100% of the liability and risk and make a 40% return on your investment, would you invest 100% of the capital needed to produce? These "Big Oil" companies would do so gladly. The problem is, the higher the oil price, the more the State takes in taxes. ConocoPhillips would LOVE to pay the State 60% of whatever they make in oil and gas recovery. The problem is, the State will not settle. There is a sliding tax scale. Currently, the "Big Oil" companies are paying through the nose. All of those things KK pointed out are called "Lift Costs". Who do you suppose provides the food to the companies on the slope? ALASKAN WORKERS. Who are the majority of the employees on the slope? ALASKAN RESIDENTS. Your neighbors, ME, and thousands of other support providers make their money from these "lift costs". Currently, oil comapnies are paying as much as 85% of their profit to the State. This is a major reason you don't have a State income tax. If these oil companies leave, the rest of the economy in this State will suffer tremendous consequences. These companies do make a LOAD of money; but isn't that their responsibility to their shareholders? Are you mad at Apple for generating the money they do, yet keep their prices consistently high? They set their prices, oil companies do not. It is a commodity. If you owned stocks in ConocoPhillips or BP or Exxon or any other oil giant, would you not want their profits up? If not, you are a socialist. Do your research. I am very glad you have a place to publicly opine and I appreciate you giving me the opportunity to hopefully educate you a little bit.
Forgive my ignorance, but if OPEC doesn't set the price of oil and gas, who does? I just honestly don't know.
Brian, thanks for your inquiry. Commodity traders are responsible for oil prices by bidding on oil futures contracts. These contracts are basically agreements to buy or sell oil at a specific date in the future for an agreed-upon price.
Commodities traders fall into two categories. Most are representatives of companies who actually use oil. They buy oil for delivery at a future date at the fixed price. That way, they know the price of the oil, can plan for it financially, and therefore reduce (or hedge) the risk to their corporations. Traders in the second category are actual speculators. Their only motive is to make money from changes in the price of oil.
It is a bit of an overstatement on my part to say OPEC does not somewhat control the price of oil. They DO set production which in turn affects price simply by virtue of supply and demand, but not nearly to the degree it did in the 70's and 80's. For example; when Iran started to be a burr in the worlds saddle, OPEC and Saudi vowed to make up the difference should Iran production be interrupted. The net effect??? Oil prices remained stable between $100 and $115 per bbl but had still risen between $10 and $25 with no net loss in production. In fact, there is now an abundance of oil on the market ... more than there was at $70 a barrel. Why? Commodities traders and speculators specualting on OPECs ability to keep up with production should Iran be shut off (which they will in July due to sanctions).
I hope this helped you to better understand the world of oil pricing.
Kenai Kid- Thanks for the clarification.
Jerry- let's put it this way; if you owned 100% of the risk and 100% of the investment, would you accept paying 60% of the profit in taxes? I can tell you 1st hand that the "big oil" companies would welcome that tax rate. The current structure is a sliding scale (thanks Sarah Palin). These companies are currently paying 85% + in taxes. As Kenai Kid pointed out, the costs of doing business are beyond imagination. These costs are called "lift costs" and are measured in $ per barrel of oil produced. Current lift cost is approximately $10-$12 per barrel. This includes everything it takes to get 1 single barrel of oil out of the ground. These lift costs can be equated to ALASKAN EMPLOYEES working to keep the oil flowing straight to Valdez.
Problem: the tax structure and liability upon the oil producers makes it less appealing to maintain production when they can take their operations to places outside and reap 60% of the profit and pay 40% in taxes without the sliding scale. You seem like a guy who wants ALASKAN people to benefit from oil and gas exploration and production. We do. Thousands of residents completely rely on the "big oil" companies to support their families and way of life. I am one of them. I work on the slope and spend my money here. This generates revenue for local economies. Oil producers leave, we ALL suffer tremendous consequences.
If you seriously think about it, these oil company taxes keep you from having to pay state income taxes. The big oil companies support community improvement projects. They display excellent corporate social responsibility.
Furthermore, is it not the responsibility of the organization to generate as much profit as possible for their shareholders? Are you angry at Apple for generating huge profits, yet keeping their product prices consistently high? They DO set their prices.
These companies show excellent fiduciary responsibility and support our economy year-round. It is OUR ALASKAN responsibility to sustain development and our MORAL OBLIGATION to help keep these jobs in Alaska.
Production Tax Reference Site.
This site is from an investment news letter which is neutral. It has nothing to gain either way ... taxes high ... taxes low! It's a little out of date (8/11) but holds a bit of insight into the tax structure from the states interest.
Very Good info everyone and thanks for all of this i really do appreciate the info.
A few questions though. Which is better for Alaska & the World, a Capitalist Govt. or a Totalitarian Govt. which we seem to be heading for at every turn with the apparently Planned distruction of Capitalism World wide?
If we are not headed for this New Hope & Fundamental Change Govt. or a Totalitarian Govt., then i will ask these questions.
So why is the price skyrocketing for gas at the pump when America is supposed to be drilling & producing more oil?
Yes it could be speculators driving up the prices, or not.
Did ya see where it is $4.56 a gal in Illinois yesterday?
I bet they still vote for Obama again if we make it to November that is.
Did ya hear that the Govt. is thinking about releasing the reserves of oil to lower prices?
This seems like a short time relief which will actually mean nothing.
So how do we fill those reserves back up, will it be with higher priced oil?
If one wanted to force more people into submission & dependance on Govt. to provide would the higher costs of All commodities result in that desire due to fuel costs nation wide?
Enough questions, my point is that it's a planned World wide price fixing. All implemented by a planned forced shortage of oil World wide to cause a Global Economic meltdown of almost every Nation. This economic melt down is well under way as we see with Greece, Spain, Ireland and on the list goes of nations that can't pay their bills and defaulting to a World Governing body for aid.
With America now at 15+ Trillions dollars in debt, actually OUR TRUE National debt is over $56 Trillion dollars, which we will never be able to pay & will default very soon, just like other nations are doing. Hope we like this New Hope & Change President thats destroying us as a Free Soverign Nation for his Global citizenship Dream Act aided by his cohorts & advocates World wide.
It's a forced economic collapse everywhere by the select few world money controlers & OWO advocates.
As i said, Thanks for the info about Alaska's Oil & gas.
Have a GR8 Day and remember who loves you.
OH Look, Obama this morning has threatened EVERY NATION that deals with Iran for Oil with Economic sanctions, even Nations that America has huge commerce deals with.
This sounds like a planned forced shyrocketing of oil to me.
Can ya say Revelation 13; which shows this OWO coming and the power it has to sanction everyone into a forced acceptance of it's desires, rules?
The Senate will pass legislation that won't get to the House floor and the House will pass legislation that won't get to the floor in the Senate
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