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Remember, oil and gas resources belong to Alaska

Posted: Tuesday, February 15, 2005

Perhaps someone needs to address the fact that our oil and gas industry extracts a non-renewable resource from the lands of Alaska. Folks, this means that tax breaks or "incentives" cannot extend the life of our known reserves. The result of giving away our resources in the form of tax breaks and "incentives" to oil producers guarantee that we, as a society in Alaska, will have less options and much less money when the bulk of our petroleum is pumped and shipped out. Don't believe the rhetoric that we can give industry our tax dollars to keep the good times rolling. It doesn't work that way.

Local newspapers continue to propagate misinformation, by repeating others' well-meaning and erroneous statements, or by simply repeating industry leaders' orchestrated mantra, that all they need is a little "incentive" to "save" the industry. I support incentive credits to promote new development. Alaska should contract leases using post-OPEC lease terms, which allow producers to recover all their development costs before we charge a single dime in severance taxes. That's a real incentive and how most of the world's oil is produced. However, once development costs are recovered, Alaska should take the lion's share of the profit. Don't forget, we own the oil.

Others believe that ELF tax breaks are only for smaller fields. However, Prudhoe Bay and Kuparuk receive ELF "incentives," which will cost our state more than $1 billion this year. How does this type of "incentive" save industry? BP made $16 billion in fourth quarter profits. Think about that when you pay your business license tax, studded tire tax and other tax increases. Remember, we own the oil.

Slick ads give a mere slice of the truth. They claim Alaska's the highest taxed and most costly place in the world to produce oil. The fact is, it costs less than $10/barrel to deliver oil from Prudhoe Bay to West Coast refineries, while market value for our oil is around $40/barrel. So why aren't you asking your Legislators why they continue giving big oil producers enormous tax breaks? No amount of tax "incentive" puts one drop of oil back into any reserve, once its pumped out.

For Alaska's future, don't forget it's our oil.

James Price, Nikiski



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