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Conoco's new ads oppose higher taxes in Alaska
Anchorage Daily News


March 16, 2006

JUNEAU, Alaska - Just weeks after endorsing an oil-tax increase that Gov. Frank Murkowski says is part of a tentative natural gas pipeline deal with the big three oil companies, Conoco Phillips has begun an advertising campaign opposing any higher taxes.

The ad campaign comes as state lawmakers are mulling changes to the governor's oil-tax plan. It makes a simple assertion: Higher taxes would suppress oil-industry spending in Alaska and would be bad for the state's economy.

"I don't see how additional taxation can do anything but discourage investment," says one man in a 30-second television spot.




"I think the industry's been taxed enough," says another.

A corresponding newspaper ad strikes a similar tone, warning readers that "additional taxation can only hurt investment in our state."

Dawn Patience, a Conoco spokeswoman in Anchorage, said the ad campaign is aimed at raising public awareness about oil-industry tax increases under consideration in the Capitol.

However, none of the ads refers to any pending legislation.

"They are trying to influence opinion, and the message is to avoid taxing the oil industry," said Ron McGee, an assistant professor who teaches advertising at the University of Alaska, Anchorage.

Murkowski last month rolled out a proposed revamp of the state's oil-production tax system. He said it is part of a package deal his administration struck with Conoco, BP and Exxon Mobil on a contract for tax and other state terms if they build a natural gas pipeline from the North Slope to the Lower 48.

The new oil-tax system would be locked into a long-term gas pipeline contract, giving the producers certainty on future oil taxes before they pursue the $25 billion gas project.

Murkowski's bill calls for a 20 percent tax on company profits while allowing them to deduct from their taxes 20 percent of the amount they invest in Alaska oil field development. The governor's proposal also includes a series of other tax credits and write-offs.

According to state projections, the change could increase Alaska's annual oil taxes by several hundred million dollars or more, if oil prices stay high.

In public testimony before the House and Senate Resources committees last month, Brian Wenzel, Conoco Phillips Alaska's vice president of finance, said his company supports the governor's plan, but only because it could help get a gas pipeline project going.

Patience insisted that the anti-tax message in Conoco's new ad campaign doesn't conflict with the company's stated position on Murkowski's oil-tax plan.

"We're opposing any increased taxes beyond what's in the original bill," she said.

After reviewing the ads on Monday, Sen. Tom Wagoner, chairman of the Senate Resources Committee, said he didn't see anything suggesting they were referring to the governor's oil-tax proposal.

"It's a message about tax increases; there's no part of it that deals with the discussion about tax credits," said Wagoner, R-Kenai.

House Resources Committee Co-Chairman Rep. Ralph Samuels said he was expecting such ads.

Both the House and Senate Resources committees are expected this week to put forward their proposed changes to the governor's oil-tax bill.

Samuels, R-Anchorage, said his committee's changes are likely to include a "progressivity" provision increase that would increase the state's take even more when prices pass a certain threshold.

Conoco's ads are likely aimed at influencing the lawmakers as the tax proposal makes its way through the legislative process, Samuels said.

"It's too late at this point to really influence our committee," he said. "I would think it's sending a more subtle message to the Legislature as a whole."

The bill will move next to the House and Senate Finance committees, which may make their own changes.

Becky Hultberg, the governor's spokeswoman, said Conoco has had misgivings about oil-tax increases throughout the negotiations, and the administration is not concerned about the message the company is sending through its ad campaign.

"Clearly they're expressing their concern about tax increases, and all along they have expressed that concern," Hultberg said.

"But they have agreed to tax increases because at the end of the process, Alaska can get a gas pipeline," she added. "We respect their right to express their views, but we may not agree with those views or with their strategy."


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