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Floor of Alaska Senate breaks into oil tax debate

Published on NewsOK Modified: February 10, 2014 at 8:21 pm •  Published: February 10, 2014
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JUNEAU, Alaska (AP) — The floor of the Alaska Senate broke into an impromptu debate over oil taxes Monday.

Sen. Cathy Giessel sparked the discussion in a special order, which is when members speak on issues of their own choosing. Hers was entitled "What Could It Look Like?"

Giessel, R-Anchorage, and chair of the Senate Resources Committee, spoke of the need for a healthy oil industry for Alaska's economy and what alternatives Alaska had for comparable tax revenues. They included having tens of thousands of cruise ships visit Alaska, every Alaskan of drinking age down 138 shots a day and every Alaskan of age smoke 10 packs of cigarette a day. She said those aren't things the state would want to do.

Giessel said there is new activity on the North Slope under the rewrite of Alaska's oil production tax, which the Legislature passed last year. The state is better protected at lower oil prices under the new law and the new system would yield more revenues if prices continued to fall than under the former tax structure, she said.

She is much happier to see the activity on Point Thomson and additional rigs on the North Slope than the alternative, Giessel said.

Sens. Hollis French and Bill Wielechowski offered rebuttals.

French, the Senate minority leader, in a speech he entitled "Another Idea," said the state also could "undo that bad tax idea and put a fair oil tax back on the books."

Alaska under the new system will never capture windfall profits when oil taxes spike as the state did under the old system, he said.

A referendum on the tax law is scheduled for the August primary ballot. French said Alaskans can go to the polls and vote to fix the tax, allowing lawmakers to work on putting a fair tax on the books.

Wielechowski, D-Anchorage, in his remarks, entitled "Where's the Production?" said Gov. Sean Parnell "promised us, told us" there would be more production — including 1 million barrels of oil — if the oil-tax change was passed. But he said forecasts call for continued production declines. He called the bill "a complete and utter failure."

Parnell, when he began seeking an overhaul in the oil-tax structure several years ago, set a goal of 1 million barrels of oil a day through the trans-Alaska pipeline system in a decade. The Department of Natural Resources in 2012 said that during that period, the target could include sources like development of smaller pools of conventional oil, production from shale and heavy oil plays and production from the Arctic National Wildlife Refuge, which state officials have been pushing to have opened to drilling. The refuge remains off limits to drilling, however.

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