Part 2: “OIL COMPANY” WALKER, “OIL CAN” ORTIZ AND OIL COMPANY SOCIALISM
By David G Hanger
March 26, 2016
“Oil Company” Walker and “Oil Can” Ortiz have earned their names because they are owned by these people. They are completely sold out. Both individuals are basically decent people, so the choice they have made is that much dumber. Three weeks ago when “Oil Company” Walker visited Ketchikan I asked him and “Oil Can” Dan if they were even aware of the magnitude of this madness? That $24 billion of Alaska oil has been extracted from the beginning of 2014 to date, on which the oil companies have realized a net profit of $11.7 billion; and on which they have not paid one dime in taxes?
The response by both of them was essentially ambivalence, as if they really did not care to know. What was obvious is they did not know the magnitude of this madness. The battle they had both chosen to fight was to turn your wallet and my wallet inside out while in the meantime these foreign oil companies blissfully walk off with tens of billions of dollars of our untaxed treasure.
THAT IS AS SOLD OUT AS YOU CAN GET. The names are writ in stone.
It turns out these numbers are actually incorrect. More updated information is now available, thus the numbers you are about to read are quite precise. All of this information comes from the most objective sources available, the University of Alaska, Anchorage, as compiled by Professor Scott Goldsmith, and directly from the State of Alaska. No figures have been juggled for any reason. It turns out this original estimate is actually quite low.
The time period I presented to the Governor covered through March 1 (numbers estimated for February), so these original numbers were intended to include two months of 2016. The numbers I here present are for only 2014 to the end of 2015. The situation in 2016 will be dealt with as a separate issue. It should be noted otherwise that the oil numbers are generally reported on a fiscal year basis, so I have adjusted these numbers to present them to you in the more easily understood calendar year format.
FROM THE BEGINNING OF 2014 TO THE END OF 2015 THE OIL COMPANIES HAVE EXTRACTED $25,676,600,000 OF ALASKA OIL WITHOUT PAYING A DIME IN TAXES.
FROM THE BEGINNING OF 2014 TO THE END OF 2015 THE OIL COMPANIES HAVE REALIZED A NET PROFIT ON THIS UNTAXED OIL OF NO LESS THAN $14,333,600,000, AND THAT PROFIT COULD BE AS HIGH AS $18,114,600,000.
THESE ARE THE FOLKS THAT “OIL COMPANY” WALKER AND “OIL CAN” ORTIZ REFUSE TO CONSIDER TAXING AT A FAIR AND REASONABLE RATE.
I have no idea how this devil’s deal began, but through the first quarter of 2016 $30 BILLION of irreplaceable Alaska oil, the property of all of the citizens of this state, has been purloined, flat out stolen, with no tax of consequence paid upon it, and now the state has a $4 billion annual hole in its wallet that they somehow expect you and me to pay.
So when you read an opinion like this “Alaska should not look to a sector that’s drowning in red ink to solve its fiscal gap,” do understand why they are lying to you so outrageously. Hiding behind the cloak of this KEEP Alaska Competitive, Jim Jansen and Marc Langlund are the owners of Linden Transport and Northrim Bank, respectively, a billionaire and a multi-millionaire whose psychopathic hoarding obsessions cannot be sated, and whose gouging of Alaskans is legendary. Taking anything they say seriously is not possible because they are incapable of telling the truth.
THE OIL COMPANIES OF ALASKA ARE NOT DROWNING IN RED INK.
Where the state government should have been collecting at least $10 billion in taxes from the oil companies in the past two years, they have collected nothing, and now “Oil Company” Walker wants to claw back $700 million to try to balance some semblance of a budget. But even this is too much for these pigs. They want it all, and they want you to pay their bills. That is what their article is all about.
Part 2 will focus primarily on numbers. I want to keep each part at two to three pages, to thereby compartmentalize the information and make it easier to consume. Part 3 will analyze how what is happening is happening, and begin to address consequences.
How, therefore, did I get my numbers? That is important for you to understand. In the first instance, the total gross of $25.6766 billion in 2014 and 2015. That information is public knowledge as previously cited, and can readily be replicated by anyone who knows how to convert fiscal year data to a calendar year format (actually a rather simple exercise).
How then was the net profit calculated? Formulaically, by subtracting the cost of production from revenue, of course. But determining cost of production gets a little tricky because that is exactly the information the oil companies don’t want you to know. The oil companies and Hollywood have this in common as well; they are both real imaginative with creative accounting techniques.
So the oil companies have wanted these boneheaded Alaska politicians to believe all these years that their cost of production has been anywhere from $45 to $50 a barrel. Anyone who has been studying this for any length of time knows that number is bogus. In addition a whole lot of plant has long since been amortized, yet still is in use, thus the cost of production, even with maintenance, has declined further.
This is where the first two months of 2016 come into play in analyzing our subject. For in December the price of Alaska oil did drop to $38 a barrel, and then declined further in January to $30 a barrel. Despite that production has increased in 2016 by 5%, this on top of a 20,000 a barrel a day increase the last six months of 2015.
Former State Representative Ray Metcalfe and I have been arguing this subject since last summer. We have analyzed all kinds of different elements associated with this question, and the clearest evidence we have is the expansion of production even as the price declines to $30 a barrel. In business there is what is known as the “contribution margin” of a product that is being sold. In certain instances a product can be sold at a loss for a period of time because its “contribution margin” in terms of revenues brought in is sufficient to justify continued production and sales because other product lines will offset any loss. This as a concept cannot work very long when you are talking billions of dollars.
The cost of production is no more than $30 a barrel. It is possible it is as low as $20 a barrel, if properly audited. The net profit is calculated and reported accordingly, the low number representing cost of production at $30, the higher net profit at $20 a barrel.
While it is true that the origins of this crime are in the previous administration, “Oil Company” Walker has earned his name by his adamant refusal to address and at least attempt to reverse this madness. So on his watch the total rip-off by the oil companies for 2015 is $10,950,400,000 in total revenues and a net profit no less than $5,382,400,000 that could be as high as $7,238,400,000. At that price “Oil Company” Walker owns it.
NOT ONE DIME IN TAX COLLECTED AND THEY WANT YOUR PERMANENT FUND DIVIDEND RIGHT NOW. Hell yes, let’s steal the most from the poorest among us first.
One final note about these “oil companies drowning in red ink.” I don’t give a damn if they are losing money on all their other operations worldwide. They are making billions in Alaska, and that belongs to us. It is not our job to balance the multi-nationals’ overall profit margin.
But that is what our dipstick politicians are doing.
Stay tuned for Part 3. Forward this to as many friends as possible, please.
David G Hanger
Received March 22, 2016 - Published March 26, 2016
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