Thursday, April 27, 2006

House To Act On Senate Oil Tax Bill

Today (April 27th) the Anchorage Daily News reports that the Alaska State House will begin taking public testimony on the Senate's proposed oil tax bill, which calls for a baseline 22.5% profits tax offset by a 25% tax credit for reinvestment into further development. Click here for full story.

Synopsis: House Finance Committee Co-Chair Mike Chenault (R-Nikiski, pictured above left) announced that his committee will take testimony on the Senate's proposed new oil tax from various sectors of the public over the next three days. The three largest producers - BP, Conoco Phillips, and Exxon Mobil - will testify today, followed by smaller producers and explorers on Friday, then consultants and the general public on Saturday. The committee is unlikely to produce its version of the bill until next Tuesday. The bill would then go to the full House floor for a vote. If it passes, the Senate would have to concur with the House's changes. If that doesn't happen, a conference committee would be appointed to work out the differences. All of that must happen within the next two weeks, as the legislative session is slated to end on May 9th.

Analysis: If I was a member of the House Finance Committee, here are some questions I might pose to those who testify:

1). To Conoco Phillips - How can you oppose an increase in the PPT in light of your newly-released economic statement, which shows that not only did your company's overall profits rise by 13%, but that profits for Alaska oil operations rose $692 million, up 30% from the same time last year, even as production fell 8% to 305,000 barrels per day?

2). To Conoco Phillips - Just what exactly did your spokesman Brian Wenzel mean when he stated "We had an agreement. Now we don't have an agreement. (We'll) have to go back and reconsider...whether or not the gas line goes forward."? How do you respond to those critics who might consider this to be "blackmail"?

3). To Exxon Mobil - How can you oppose an increase in the PPT when you were able to afford a "golden parachute" for former chairman Lee Raymond? Just exactly how much was that "golden parachute"? Was it $167.7 million, as the Washington Post claimed on April 16th, or was is as high as $400 million, as claimed by ABC News.

4). To Exxon Mobil - Why, after 12 years, do you continue to stubbornly appeal the civil judgment rendered against your company, originally $4.5 billion, but now $6.75 billion with accrued interest, in light of the fact that your company earned an astronomical $36.1 billion in net profits last year? Why don't you propose a counteroffer which, if accepted, would save your company further legal fees and bring closure to the residents of the Prince William Sound affected by the Exxon Valdez spill?

5). To all producers - What impact would eliminating the Economic Limiting Factor (ELF), as former legislator Ray Metcalfe advocates, have on your company's operations?

6). To members of the general public - How has sustained high fuel prices impacted your life? How much have you had to curtail your personal transportation? What have you been required to give up in order to continue fuel use at previous levels? If you use heating oil, how much more did you have to pay this past winter to heat your residence or business?

7). To all - In light of the billions the producers have invested in this state, and the visible, generous, and frequent contributions the producers have given to various charitable causes, are we justified in "changing the rules of the game"? (For fairness, this question must also be asked)

To understand graphically how the producers contribute to Alaska versus how they contribute to other oil-producing areas, see the graph Ray Metcalfe has posted on the Republican Moderate website.

Contact your lawmakers anytime, either by phone (toll or toll-free), e-mail, or by sending a 50-word Public Opinion Message (POM). Each phone list has a standard e-mail address format on top; the only variables are the lawmaker's title and name.

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