A Short Time Line Opens For Separating Oil and Gas Taxes

By Dave Donaldson

The House today took its first serious first look at the Senate bill that would separate the state’s oil and gas taxes.    Senate Finance Co-chair Bert Stedman  recapped for the House Finance members how the current oil and gas tax structure has developed over the years.

He said that – because of tax breaks and the progressive nature of the tax — the current structure will lead to a potential risk to state revenue if  gas producers begin to use a large-diameter gas line from the North Slope to Canada.  Stedman puts the possible loss somewhere between two and three Billion dollars a year – under current market prices.

In previous testimony,  in other committees,   the Parnell administration has said the tax break is in place as an incentive.    Stedman disagrees.

I would argue that it’s not an incentive,  it’s a giveaway.  And it’s not an incentive, it’s a petro-shell game being played on the state of Alaska to a magnitude that is staggering. In fact, to a magnitude that most people don’t even believe the numbers.  They’re huge.  They’re in Billions.

Fairbanks Democrat Joe Paskvan says he came around to Stedman’s view of the need to separate the two taxes.  He says the risk is one hundred percent of the production tax,  one hundred percent of the royalty, and reducing oil revenue to cover the loss.

We are losing hundreds of millions of dollars a month.   That, I would advance to you, is a third world resource extraction model where we are paying while our resource leaves the state. I would submit that by decoupling, there is absolutely no increase in oil tax.

Committee members,  reflecting comments from other House members who didn’t follow the issue as the Senate dealt with it,  say they have only a few days to comprehend a subject that others have had for lengthy hearings and debates.  Chairman Mike Hawker  says he is prepared to meet until the early morning hours if necessary.  He anticipates a major amendment tomorrow,  with floor action this weekend.


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