Monthly Archives: July 2012

This Blog: Adding a New Source to the “One Stop Shop” …

From the beginning, this blog has been intended primarily to provide a “one stop shop” for those interested in keeping up to date on developments and trends affecting Alaska oil & gas.  Part of that is through the commentaries appearing on the left hand side of the page, part is through the shorter commentaries linked on the top right of the page, but an important part also is through the headlines appearing under the header “Daily News and Articles” appearing farther down the right side of the page.  That column contains the current headlines from the news sources which I believe, combined, provide the best insight into current developments and trends affecting oil in Alaska and the industry at large. Continue reading

“Understanding Alaska’s Budget” May Explain Much More Than It Intends …

As some readers may have noticed, I publish shorter, less formal “thoughts” occasionally on another page, which I then link to this page in a box located in the upper right corner of this page entitled “Observations & Updates.”  The reason for using the separate page for those shorter pieces is because I don’t want them to displace the longer thought pieces that appear in this section of the blog.   A recent piece appearing on the other page, however, which started out short but turned into a longer piece, has attracted substantial attention and, as I have thought about it, should be included also on this, main page.  It follows below:

ImageThe Alaska “House Special Committee on Fiscal Policy” yesterday released a new website focused on “Understanding Alaska’s Budget.”  The website may explain much more than the authors intend about how Alaska has worked itself into its coming fiscal crisis — and why recent legislatures have made the problem worse.

The press release announcing the website provides the first clue.  The release quotes the Chair of the House Special Committee as follows:

“We’re in the cat-bird seat, financially, now, but with throughput this week under 400,000 barrels, and with a volatile oil price, we need to prepare people for the likelihood of lower revenue. That means also preparing to handle the challenges before we reach a crisis – that’s what this is meant for.”

Alaska is not in “the cat-bird seat, financially, now.”  Alaska has a temporary cash surplus, the same way that you or I would if we treated as current disposable income the money that we otherwise need to put away for our children’s college tuition or our retirement.  Spending it now means that our children — and us — will be worse off in the future as our income winds down but our spending needs continue. Continue reading

Alaska Oil Tax Policy| Ships Passing in the Night (from the July 2012 Alaska Business Monthly)

Recently, I agreed to write a bi-monthly column on oil & gas issues for the Alaska Business Monthly.  This is the first column, originally published in the July 2012 print edition and available online here.  

Alaska’s approach to oil and gas taxes has taken a number of twists and turns over the last several years. The latest twist may largely be the result of ships passing in the night.

Background

Shortly following her election in 2006, Gov. Sarah Palin proposed a set of changes to the then-existing tax structure. She termed the package “Alaska’s Clear and Equitable Share,” or “ACES.”ACES changed a previous package of modifications which had been enacted in 2006.

Although he supported ACES at the time it was passed, late in his campaign for his own term in 2010 Gov. Parnell began generally to talk about what he then termed as the need for “tweaks” in ACES. Following his election, Parnell proposed a set of changes, which was introduced in the Alaska House of Representatives and subsequently referred to as “HB 110.” Continue reading