The first year you sent me to the Legislature, Alaska took in $2.1 billion in oil revenues. The year I retired, the total had dropped to $1.3 billion, and then it tanked in 1999 at $913 million.
I can tell you from personal experience that it’s much more enjoyable to spend a surplus than cut vital programs that affect every Alaskan’s life.
The culprit in the 1990s was unstable oil prices; the problem today is declining production. To pass an oil and gas legacy onto our children and grandchildren, we must create an atmosphere that encourages the billions of dollars of investment it will take to prop up our falling oil production.
The resource is there. Another Prudhoe Bay awaits us, but this next generation of oil and gas is technically and financially challenged. We’ve spent years trying to figure out how to bring it on-line but the economics have always stumped us.
That’s why it’s so important that we adopt a long-term tax strategy that makes it possible to develop these enormous resources, that encourages companies to invest the tens of billions it will take to keep the pipeline flowing for another 50 years, that ensures prosperity for my grandson.
I’ve watched with interest another aging oil province far to the south of us. Most people wrote off the Gulf of Mexico decades ago as an ancient oil field that had outlived its glory. Then the federal government changed the rules and offered incentives and tax breaks to explore for oil and gas deep, deep down. So deep it required new technology and billions of investment.
Today the Gulf has the lowest tax rate in the nation and is one of the world’s most active exploration areas despite hurricanes and the other natural phenomena you encounter when you drill in water depths exceeding 5,000 feet.
The Alaska Constitution requires us to maximize our return on our natural resources. That means we must ensure that the decisions we reach are fair and equitable for today and tomorrow. That’s this Legislature’s challenge. I wish them luck.
Gail Phillips served Alaska for 20 years in elected office, at the local, regional and state levels, including Speaker of the House.
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