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Representative responds to oil tax debate criticism

Posted: August 29, 2011 - 10:01am

When debating proposals that could cost Alaskans billions of dollars, it’s important to have your facts straight. Recently a lobbying group took liberties with the facts to sway you into giving away Alaska’s fair return on the oil we own. People are entitled to their opinions. But they are not entitled to make up their own facts.

It is irresponsible to mislead the public in an effort to promote a state giveaway to Exxon, British Petroleum and other companies that have reaped over $20 billion in Alaska oil profits since our new oil tax and investment incentive law, ACES, was passed in 2007. The very law that, according to a recent Petroleum News article, will likely lead to the busiest exploration season on the North Slope since 1969. A law only multinational oil companies reaping staggering profits could call oppressive.

In a recent AM talk radio tour, and on their website, a group calling itself “Make Alaska Competitive” has engaged in the politics of deception and personal attack. That’s too bad.

Why the attack? Well, many of us believe it is unwise to give away $8 billion — as the Governor proposes — in exchange for no binding promise that this money will create new Alaska investment in needed exploration. In fact, BP and Exxon both testified they won’t likely do any new exploration when they receive the Governor’s tax giveback. The Governor’s proposal lets companies invest only in what they were going to do already, and take that $8 billion out of Alaska to give to executives and shareholders.

So what launched this group’s recent attacks? A few weeks ago Senator Hollis French noticed two new BP land-based drilling rigs on their way to Alaska. Senator French and I noted that this was good news for Alaska, and showed the current tax credits and deductions — which a company can only receive if it invests in Alaska — helped bring the $250 million in more effective rigs up here.

Oil industry folks immediately claimed the rigs were contracted for in 2007, before BP knew about the 2007 adoption of our new oil tax law. They argued that had BP known the current law was going to be adopted, it would have never made this investment. They accused Senator French and me of misleading you. Fishy, we thought. Our staff did some research.

In fact, these rigs were ordered in 2008, AFTER ACES passed. It’s not surprising BP knowingly made $250 million in needed investments under a tax law that has earned the corporation over $7 billion in Alaska profits since 2007, and that provides handsome tax credits for new Alaska investment.

Where’d we find the facts? First, there is Parker Drilling’s 2008 Annual report. Parker, which built the rigs in question, states in its “2008 Highlights” section that, “BP subsequently awarded Parker a new contract to build and operate two new arctic class land rigs for development and drilling in Alaska.” Newspaper accounts, including one from the Houston Business Journal on May 6, 2008, also noted this 2008 contract, stating “Parker Drilling Co. has won a five year drilling contract valued at $250 million” for these land rigs, “awarded by a subsidiary of BP….”

But for a week the “Make Alaska Competitive” folks went on the radio to personally attack Senator French and me for, um, telling the truth. Since they haven’t made a correction, I’ll do it here. Oh, by the way: contrary to industry claims, jobs on the North Slope are near a record high. We’re not losing jobs. Instead, companies have effectively limited job opportunities for Alaskans by hiring far too many non-Alaskans on the North Slope. That’s wrong.

It’s one thing to do as I and others have proposed – increase our tax credits for new exploration on the Slope, and for new processing facilities needed to put new oil in our pipeline. It’s another to mislead folks into supporting a tax giveaway that requires no new investment in Alaska just to pad profit margins in Houston and London.

Let’s debate. But please don’t mislead Alaskans to get your way.

Les Gara, a Democrat, represents Anchorage in the Alaska House of Representatives.

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KenaiKardinal88 08/29/11 - 03:13 pm
Les Gara is wrong

Read Gara's comments carefully - his emotive language is meant to appeal to the dumbest among us.

The impact of raising the oil taxes has shut down development on Alaska's North Slope and resulted in laid off Kenai Peninsula oil workers.

Let Gara go back to his liberal Anchorage roots and leave the working men and women of Alaska alone.

bob99507 08/30/11 - 11:23 am
Gara's a politician

As a politician you would never mislead anyone,now would you?

witchwitch 08/30/11 - 12:14 pm
Gara is right...

I think the $8 billion of windfall profits more appropriately belong to the owners of the resource, which are all Alaskans and not the oil producers.

Gara's facts are right and I support his position 100%.

DRILLALASKATAPNOTTAX 08/31/11 - 01:33 am

Hollis French & Les Gara and people that share witchwitch mind set should think of this one fact.

FACT; not one Alaskan has ever risked money to drill, find, transport to market and record a profit under Alaska's high oil tax and overburdening oil and gas laws!

Gara and French need to eat the food they are trying to sell, they can't do it. These two guys will never drill a oil and gas well and I don't think they have friends that can under these high taxes.

You will never see a Les Gara , Hollis French OIL and Gas Company in Alaska make money by investing in drilling and selling oil in Alaska!!

These hard working oil company only want what ACES took after a bait and switch shell game was played on them in 2006. The world is on to it that is why it is near imposible to get oil companies to come to Alaska.

What little success we have is because of Gov. Parnell one million barrels per day plan and lower taxes. They are waiting to see if HB 110 passes before they put up the big bucks, IMO!

The fact is Alaska has the lowest Baker Hughes average daily rig count in the nation at 7 this week while Texas has well over 700 anygiven week, which helps prove Alaska need lower oil and better regulations.

Production has declined both in the Cook Inlet and North Slope to the lowest levels ever and the Wall Street Journel make fun of this and says.. Trans Alaska Pipeline will be the world's "largest stick of Chap stick".

Not one Major has bid in any meaningful way in the State's North Slope sales in years. Alaska needs investors and this raising taxes under ACES after these fine companies made these drilling investment years ago and now under ACES is taking billions from them is wrong. This is not right! It is like me selling you a steak for one price when you sat down and charging you twice that once you got the bill but worst! Alaska has earned a bad name for this tactic and the Fraser report puts Alaska as one of the worst place to invest in oil and gas in the world.

I suggest work with Governor Parnell and the House on HB 110 and SB 43 and lower these taxes or offer the liqudate the Permenent Fund so those Alaskans who want to drill can!

Alaska is taxing it self out of the worldwide competiton oil and gas risk Capital. Other places in the world are now happy these companies are leaving Alaska and laying off. The TAPS will be shut down and so will 90% of it's funding or Work with the Governor, his plan can work.

Elections are the best thing Alaska has going for it except it's great land and people. French and Gara please work with the House and Governor Parnell on HB 110 and SB 43. Election are coming up and Alaskans want oil and gas jobs and investment.

DRILLALASKATAPNOTTAX 08/31/11 - 10:58 am
drudge 1 (dr j). n. A person who insults people that cites facts

drudge - definition of drudge by the Free Online Dictionary ... - CachedSimilar
You +1'd this publicly. Undo
drudge 1 (dr j). n. A person who does tedious, menial, or unpleasant work. intr.v. drudged, drudg·ing, drudg·es. To do tedious, unpleasant, or menial work. ...

Drudgeries - Drudge (redirected from drudged) - Drudger - Drudgework

Raoulduke 09/05/11 - 10:02 am
Alaskans risk

Every dollar of tax break given is a dollar from an Alaskan.the natural resources are the Alaskan's.So1 Alaskan's do pay a risk by having to trust the Politician to do the right thing for all of Alaskan's.Unfortunately!Our Representatives have been in the oil corporation's pockets for so long.Every election has been a RISK.

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