SitNews - Stories in the News - Ketchikan, Alaska

Viewpoints: Letters / Opinions


By David G Hanger


January 13, 2016
Wednesday PM

The average price paid for North Slope oil in fiscal year 2015 was $73 a barrel which exceeded by a fair margin the state’s forecast of $67 a barrel. In the meantime in the second half of calendar year 2015 North Slope oil production was 20,000 barrels per day more than last year. (Figures from State of Alaska, various reports.) Total production levels for 2014 exceeded 95.25% of the production levels of 2013.

It does not take someone long on smarts to see that if your price per barrel sold exceeded your estimate by $6 per barrel you did better financially than you expected. Nor is it difficult to understand that if you produced more than 95% of the total you produced a year ago that your business is still in real good shape. And here lately we have jacked up production 20,000 barrels a day, and you don’t do that because you are planning on losing money on the deal.

There is not in fact a sudden crash in oil production on the North Slope. In fact in recent months that production has gone up 20,000 barrels a day.

The new annual $4 billion hole in the state budget is not the consequence of drastic short-term reductions in oil production, nor is it the consequence of the price of a barrel of oil. In the last fiscal year they exceeded their revenue projections per barrel of oil by almost ten percent.

This $4 billion annual deficit is the consequence of legislative policy and the absolute insanity of changing the oil tax formula so the oil companies don’t pay a dime in tax until the price of a barrel of oil is $113.

State corporate taxes on almost all corporations have also been eliminated.

So for all of you who may have thought that not taxing the oil companies and the corporations was the way to make an ideological statement about your hatred of taxes duly note that the folks who brought you this concept now want $2.3 billion of that deficit they created out of your hide.

They want $1.07 billion in individual income taxes, and they want all of the earnings of the Permanent Fund, thereby depriving you annually of $1.2 billion in dividends. From Big Oil they want $700 million, from businesses $100 million. $2.3 billion from you, $700 million from the oil companies.

While it is true that oil production is projected to decline during the next decade for the next five years that decline is very gradual, meaning we should not be having a financial problem of this magnitude at this time.

This financial crisis is by intent and by design.

In 2014 state tax revenue from North Slope oil production crashed despite the fact they produced more than 95% of the production of 2013 and exceeded their price per barrel projections by almost ten percent.

The state financial crisis is a sham perpetrated to benefit the oil companies and to avoid the reality of free market enterprise by artificially maintaining oil industry employment in Alaska despite massive layoffs in Texas, Oklahoma, Louisiana, North Dakota, and Canada. By not paying well head taxes the oil companies can produce indefinitely more or less; but from the standpoint of the State and its people this production is essentially pointless because it is revenue zero.

This creates the very dubious situation of a government without any money, so reserve accounts that could be used to fill small holes in the budget over decades of time are consumed in total in three to five years. The oil companies benefit, their cronies in government benefit, and everyone else has been effectively bankrupted.

Now the State says they want 6% of your income as a state income tax. They want more than $1 billion from this source, but a 6% tax will raise around $350 million at most which is about one-third of what they say they want and need. So their solution begins as a scam. To meet their targeted number they need at least a 20% state income tax. An absurdity already.

But that, of course, is just the tip of the iceberg, for they want another $1.2 billion from you by depriving you of your Permanent Fund Dividend. At which point you effectively are talking about a tax rate around 40%. Not to mention that the state tax scheme burdens families with children to an extreme extent, the exact opposite of Federal taxing policies which substantially reduce tax obligations for families with children.

The even dimmer bulbs at the local level are scheming already to clip you for as much as they can possibly come up with, and then some. I have not yet heard of a single $120,000 a year local government job on the chopping block. Screw you.

In the private sector you have a $4 billion hole in the road with similar production levels the CEO, the Board of Directors, and every key department is fired to the last employee. This failure is colossal, and almost exclusively the consequence of an intentionally perpetrated fraud, i.e. the change in the oil tax formula. These crooks knew the consequence of this before they did it.

As for the rest of you I hope you have learned that being brainwashed to believe that some rich fellow not paying taxes is not going to have immediate and drastic consequence on your wallet is the belief of a sucker whose pocket has already been picked.

No new taxes whatsoever until the old oil tax formula is restored. If we are not making any money on the deal, we might as well shut the pipeline down.

David G Hanger
Ketchikan, Alaska


Received January 13, 2016 - Published January 13, 2015


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