Oil production is our state’s economic lifeline. Alaskans should be alarmed because daily oil production in Alaska has plummeted 65% from more than 2 million barrels per day in 1988 to 700,000 barrels today. The Trans-Alaska pipeline is only a third full, and oil production continues to fall. Production and revenue forecasts by the State of Alaska suggest the future decline in production will become even more pronounced without further investment in oil fields that are not yet developed or have not been fully developed. In fact, the state is forecasting that in 10 years, nearly 50% of our production will need to come from “new oil.”
Billions of dollars in new industry investment can slow the production decline and help ensure a sustainable future for Alaska. However, a strong business climate with a stable tax environment is vital to steer this level of investment to Alaska, as opposed to opportunities elsewhere.
“We need to do a better job of aligning our tax policy with our goals. If our goal is to encourage exploration and reinvestment in Alaska to increase oil production, then increasing taxes again will have the opposite effect. This is Economics 101. We need to reward risk taking, not penalize it.”
– Marc Langland, President, Northrim Bank
“Keeping oil companies guessing on what they will pay while they are considering building a $25 billion natural gas pipeline is poor policy.”
– Lew Williams, Retired Publisher, Ketchikan Daily News
“How well is PPT working? So well that it brought in about $1 billion more in state revenue in fiscal year 2007 than the old system would have brought in...We bring this up because Gov. Palin and her team should stop calling the petroleum profits tax, or PPT, a failure.”
-Fairbanks Daily News-Miner, 9/6/07
“The effects of this tax increase will ripple across our entire economy if it curtails new investment in oil and gas. Oil production is declining faster than the state and industry expected and that, combined with the increasing state budget, will create serious problems for our economy until new oil investment is made to flatten the production decline.”
– Tim Bradner, Alaska Business writer
“For the third time in three years we are back debating how much we can tax the oil industry without doing long-term (and perhaps even short-term) damage to our economic future.”
– John Shively President, RDC, Former Commissioner, Alaska Dept. of Natural Resources
