U.S. Sen. Lisa Murkowski, along with the North Slope Contractors Association and the pipeline trade unions, held a press conference on Friday afternoon to urge voters to vote against ballot measure 1 in August. The measure would repeal a recently passed oil-tax overhaul, and would revert it back to ACES, the system that was passed during Sarah Palin’s tenure in Juneau.
Murkowski, the eight union reps and contractors all said basically the same thing: The future of Alaska is at stake. Under the new regime, the state stands an economic chance. Under the old regime, it doesn’t.
“At end of the day, what oil tax reform was all about was ensuring that we have good strong jobs and a good strong economy in the future,” Murkowski said.
The unions and the contractors represent thousands of workers, and because the union vote is often a Democratic vote, it was likely the biggest show of bi-partisan support against the measure to date. The Alaska Democratic Party, and most Democratic lawmakers and candidates support repeal. U.S. Sen. Mark Begich, who’s undoubtedly the titular head of the party, said that he’ll remain neutral, as will the Alaska AFL-CIO, and likely the teachers union.
Passing ACES, then the years’ long fight to change it to the current structure, and now the fight to revert back to ACES, has been energy sucking and grueling, to put it mildly. Those who support repeal say that the old system gave Alaska its fair share of oil revenue at long last. Those who oppose it talk about how the system, which took more as the price of oil increased, has been stifling investment in Alaska’s aging oil fields.
One side has the money. The other side has the passion and idealism. From both sides numbers are proffered. Charts are presented. Experts saying one thing. Other experts saying another. It goes on, and on.
Although the intensity has risen, the nub of the issue isn’t new. Alaskans have been arguing about oil taxes since Prudhoe Bay, the largest oil field in North America, was discovered in 1968. Some might even say it’s been consumed with the issue. And as time has gone on, and as the state has relied more on oil tax revenue, the arguments have become increasingly divisive.
This is what happens when an issue morphs from simply an issue into a symbol. When that happens, each side chooses their own facts, and they sit in their corners and refuse to budge. Alaskans know this well. Think ANWR. Think Pebble, which was fast becoming the next ANWR. Think ObamaCare.
In all of the arguments about oil taxes, only a few things are absolute in the debate: Oil production has dropped from its peak of 2 million barrels a day in 1989, to about 550,000 today. The state’s general fund is about 90 percent reliant on oil money, and when it gets more money, it spends more money. Every Alaskan gets a check every year because of oil, and we don’t pay any state income or sales tax. There is nothing in the foreseeable future that will replace oil as Alaska’s economic driver. Those are the facts.
The questions: Why is production declining so precipitously? Will lower taxes help? Is the state being taken advantage of by the oil companies? Are we getting our fair share?
The fight doesn’t seem all that complicated to the union members who showed up at the press conference to urge a “no” vote. One by one, eight of them, some of them awkward in front of the mic, stood up and tried to tell the story from their point of view, which is basically this: Business is good and getting better. And if the oil companies go away, so do jobs. They spoke of hundreds of new jobs now that oil taxes have been reformed. They talked about having hope. They talked about the next generation.
Alaska state Sen. Hollis French, who is one of the most vocal proponents of repeal, and pro-union, questioned the veracity of the members. “I think they’re getting squeezed by the industry to support this,” he said. He said the he knew this based on some conversations that he’s had with business managers in Fairbanks.
Vic Fischer, a chair of the repeal effort, went further. Fischer is quoted in the Anchorage Daily News commenting about union support: “We’ve got the support of 50,000 Alaskans who signed the petition, and they are supported by large corporations who are afraid of losing the sweet deal they got from the administration.” Fischer helped draft the state’s Constitution that was ratified in 1956. Throughout the years, he’s been front and center in the oil tax battle.
In other words, nothing the union members, or any other group, can say to sway either of them. They’re sticking with the symbol.
The oil companies have their own symbol too. And one of them is Alaska. When they’re negotiating taxes elsewhere around the world, they use Alaska’s production decline as a cautionary tale of what happens when an oil province raises oil taxes. They point to the boom that’s going in other areas with tax regimes that they find more business-friendly.
At the press conference, Murkowski told a story about visiting the North Dakota oil fields and about how people knew her there. They knew her because they were Alaskans. The same thing, ‘honest to God,’ happened when she went to Midland, Texas.
“This was not a good thing,” she said. “I know those Alaskans in North Dakota and Midland, Texas, would much rather be here where their families are,” she said. And then she talked about how the “real rub” was that California was beating Alaska in production. “California? Really?”
Perhaps the oil tax change won’t matter. Perhaps it won’t make a difference, and regardless of the tax structure, oil production will continue to decline as rapidly as it would otherwise. Perhaps North Dakota, and California were bound to overtake Alaska’s oil production.
Or maybe not. The oil companies and their allies have told Alaskans that this new tax regime will help stem the decline, and if we revert back to the way it was, production will continue to decline rapidly. And Alaska will once again be used as an example of what happens to an oil regime that doesn’t play nice.
It’s not a bad positon for them to be in. For them, it’s win-win. They’ve got other opportunities, other futures. We don’t. We’ve been too busy fighting over oil taxes to create other futures.
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