Skip to comments.What Palin Really Did To the Oil Industry
Posted on 08/22/2011 8:17:41 AM PDT by The Bronze Titan
Oil companies in Alaska are paying more money in taxes than ever before. The state's oil and gas tax revenues for its just-ended fiscal 2007 topped $10 billion. That's twice as much as fiscal 2006 and four times more than 2004. Some supporters of Barack Obama see that money coming in and say that John McCain's running mate, Alaska Gov. Sarah Palin, must have done what Sen. Obama wants to do -- sock those companies with a big fat windfall profit tax. This is a deeply misleading reading of her 2007 tax reform.
(Excerpt) Read more at online.wsj.com ...
-"In 2006, then Gov. Frank Murkowski, a Republican, proposed changing the state's tax on oil...
-"One year after it went into effect, the Petroleum Profits Tax brought in far less revenue than expected and the state suffered a revenue crunch."
-"Mr. Murkowski's plan turned into a disaster."
-"Meanwhile, as the shortfall appeared, a number of state legislators were on trial, under indictment, or under investigation for bribery by the FBI. "
-"As a new governor in 2007, Mrs. Palin stepped in to address the fiscal crisis and restore accountability. Working with Democrats and Republicans alike"
-"Relative to the old system, Mrs. Palin's plan -- called "Alaska's Clear and Equitable Share" (ACES) -- improves incentives for developing new resources."
-"Her plan includes an escalator clause that gives the state a larger share of revenues when oil prices rise. This is common to production-sharing agreements all over the world."
-"A direct share in oil profits for every citizen is the ultimate incentive for more drilling. That's why in Alaska drilling for oil seems almost universally popular, while other states are drill-phobic."
They actually get a check at times if I am not mistaken..at least they claim it on Alaska boards. Are we advocating that on a conservative forum. I have serious hesitation about that. Taxing business to hand out cash to folks.
Taxing them for infrastructure improvements necessary for the increases in population they bring is good but just handing out money is problematic to me and yes I am aware that she didn't start that....it started as some Dividend Fund...35 years ago...
Let's see ...what do reasonable folks here think..should local government tax businesses and give part of that money to the local population as cash? Does any other state do this?
One could argue that it's better to do that than have the govt waste it on BS...it's pretty nuanced question. It can breed dependence or it could be used to reduce taxation on citizens.
I do not know what state and local taxes Alaska has...once upon a time when Texas was oil and gas rich and in production and the Texas Railroad Commission which governed it was bringing in so much royalty revenue to the state that Texas had virtually no statewide tax.
Boy, these bastards are afraid of Sarah.
They are covering their gonads with both hands.
Under 0bambi there is no oil in the first place....like Exon being denied drilling on their new and huge discovery in the Gulf.
So Gov. Palin raised taxes on a major American industry — the oil industry
Murkowski : 22.5 % tax rate
Palin: 25 % tax rate
that’s a tax increase ... right ?
And did not state govt. spending rise under Gov. Palin?
Who would have thought the media and some posters around here actually misrepresented the facts?
I am shocked, yes shocked, I tell ya.
It is like ....
A capital gains tax for oil or better yet .... inflation protection for the state’s long term contracts.
I don’t see anything wrong with it as long as the percentage is fixed or the percentage increase is very small.
I don’t know the details of what she did....makes me want to sign up with the WSJ just so I can read the rest, but I can find the details other places.
The government needs to run more like a business. A Business wouldn’t enter a long term agreement (Multi-year) fixed price contract without some variable to be considered in the price for the items/services.
The fact that she did this..just means she is smart....how she did it determines if she is a socialist or a free market capitalist. I make no judgment either way on this topic.
“And did not state govt. spending rise under Gov. Palin?”
NO it didn’t!!!!
Spending actually declined under Gov. Palin.
Right. obama has zero interest in drilling for oil on our shores or directly off our shores, but Brazil and China are A-OKAY with him.
The oil rights belong to the people of Alaska. When prices are high, they pay an even higher rate for energy than folks in the lower 48. This tax plan provides balance.
The question isn’t whether spending rose (I really don’t know the answer to that), the question should be, did spending go beyond revenues?
If we accept that a state government SHOULD spend a certain about on certain things, then they have to increasing spending as the population increases. There is nothing inherently wrong with that. However, if they increase taxes just to spend money on new crap that’s not needed and not connected to the legitimate increase I suggested above, then that’s wrong.
Again, don’t know the answer to that. Just saying, “increased spending” alone does not give conservatives “permission” to damn a politician all by itself.
The article is from September, 2008 and you can read it by simply clicking above where it says *continue reading*.
oh, I thought it was subscription only
I think it is, for the articles on the day they’re published.
It doesn’t make sense to me.
The rationale (as I understand it) is that the people of Alaska own the resources and therefore the extraction companies owe them a royalty on those resources upon extraction.
But this doesn’t make sense to me, because when the resources are gone, what do future Alaskans own? Why do people own the resources just because they happen to live in that State precisely now as a point in time? Who owned the resources before? The Inuit?
If anything, the taxes collected should be put in a ‘lockbox’ for future generations ... but even that is supect.
With the ACES tax structure, Alaska scores very low in a comparison of places to invest for Capital investment for petroleum facilities.
Fraser Institute - Global Petroleum Survey 2011
See Table 1: Jurisdictional rankings according to the extent of invest mentbarriers, page 15
When France, Italy and Ghana score higher as a better place to invest for an oil production facility, it is time to fix what is broken.
The survey continues to break it down into areas of concern, including topics like stability, regulations, and fiscal. In the United States, fiscal terms pose a greater barrier to investment in the US Off shorePacific,
California, and Alaska than in other jurisdictions. (page 79)
Figure 25, page 83, shows onshore Alaska scores lower in Taxation Regime than all other states except Ohio and California.
The survey was distributed to managers and executives in the upstream petroleum industry.
The survey was administered from January 31, 2011 to April 25, 2011. A total of 502 individuals responded, representing 478 companies. As figure 1 illustrates, about 60 percent of the respondents identified them selves as either a manager or holding a higher-level position. The companies that participated in the survey account for more than 60 percent of the annual spending on petroleum exploration and production by the international oil companies
There is nothing wrong in charging industries for resources. Do you think they should get it for free if the citizens own the resources? This is pure capitalism at its finest.
Pray for America
Which makes no sense from an environmental point of view (which is their rationale for not drilling on our lands and in our coastal waters). On the one hand, they propose that the entire world has to come together combat global warming and then in the next instant, it's good environmental policy to drill elsewhere, not here. And further illogic is that it is OK to use the products of that elsewhere drilling.
On the smaller scale, California won't allow any new refineries in their state, but they don't reduce their use of refined oil to the amount they refine in-State. The moratorium on refineries (and off shore drilling) is based on 'environmental' reasons. So if the oil extrated elsewhere and is refined, sa in Texas, it's environmentally OK?
Long as I live I will never understand liberal 'logic'.
[ -”As a new governor in 2007, Mrs. Palin stepped in to address the fiscal crisis and restore accountability. Working with Democrats and Republicans alike” ]
“restore accountability” - this is what scares the left out of their knickers.
The royalty payment was not change by Sarah Palin. A royalty payment goes into the Permanent Fund that is saved for future generations. About 1/2 the earnings of the fund, including the royalty payment is shared with the Alaskan people based upon a 5 year average. Most of the money in the check comes from performance on the investments, about 1/5 is from the royalty income.
This process by keeping half of the earnings and returning to the fund allows it to grow for future generations.
ACES, the taxing policy implemented under Sarah Palin’s direction is a tax on profits. Expenses including the royalty payments are deducted then the remained taxed. This rate increases as the profit increases. This money does not go to the fund but goes directly into the State Treasury for government spending.
Many outside people confuse the royalties and taxes.
The state's oil and gas tax revenues for its just-ended fiscal 2007 topped $10 billion. That's twice as much as fiscal 2006 and four times more than 2004I guess there's no relation to increased tax revenue with increased production and record profits...Only that Palin raised taxes on those poor oil companies.
I went and read the entire thing ... but didn’t learn more about “Her plan includes an escalator clause that gives the state a larger share of revenues when oil prices rise. “
That is the part that people say makes her like the wind fall profit tax.
It is all in the details, If she enters the race...I will want more information.
No. 5.5% real reduction in Yr. 1, 9.5% by the 3rd budget (her budget).
You're right and she ran on that promise too, as Al B. posted last night:
And that's what she did.
I'm guessing you never read any commercial and residential standard leases, nor commercial contracts for goods and services.
Demonic-rats are in the pockets of whacked-out and greedy environmentalists. There’s no such viable thing as green energy. It’s all grand scheme and hoax.
And it worked:
August 14, 2011 (from the McClatchy ADN, no less) -- Slope exploration seaason looks to be busiest in decades
Yay, you’re here! I just posted a portion of your fabulous post from last night!
"Alaska under Palin was the only state to see a reduction in total liabilities (34.6% overall, 11.5% per year), due in large part to the Governors insistence that the States surplus be used to pay down unfunded pension obligations and forward-fund education."
Begrudging credit to their magnificent former Governor Palin? (Linking now).
She forward-funded education by $1.2 billion during her tenure.
A: its not a hit piece.
B:SEPTEMBER 5, 2008 | JAMES P. LUCIER JR.
2005 - 6.9 billionYou can figure out when Palin was actually Governor, every time I try to match these to her term someone yells at me that I'm doing it wrong. But clearly the budget went up every year from 2006-2010, so obviously spending increased under Gov. Palin.
2006 - 7.4 billion
2007 - 7.8 billion
2008 - 8.6 billion
2009 - 8.9 billion
2010 - 9.5 billion
Note that since government spending in Alaska includes the tax money from oil companies that is distributed to individuals, it may be that there are subsets of spending that decreased during her time in office.
So what exactly is your job with the Romney campaign?
I didn’t take it as a gratuitous slap but that’s JMO. I took it as Kay Cashman’s effort to stay in the good graces of Sean Parnell.
At any rate, the legislature said no without more data that ACES was impeding new exploration. As the link above indicates, no such data exists. Parnell is just wilting under the pressure from the Big 3 and their buddies in the Corrupt Bastards Club.
Will the legislature hold firm next session? Who knows. If Palin is on a path that will take her to DC, they might flinch...LOL.
2005 - $5.8 billion
2006 - $6.3 billion
2007 - $6.5 billion
2008 - $6.5 billion
2009 - $6.6 billion
might flinch = hold firm.
Governor Palins key legislative victory, Alaskas Clear and Equitable Share (ACES) , has been a transparent, constitutionally-based, pro-growth success. In 2007, Governor Palin signed into law ACES, an oil tax structure that includes incentives for development and investment in capital improvements and ensured that Alaskas resources would be developed for the maximum benefit for the people of Alaska as per their state constitution. The Alaska constitution states that the states natural resources belong to the people of Alaska."
-"If anything, the taxes collected should be put in a lockbox for future generations ... but even that is supect.
ACES has been a success for both the people of Alaska and the oil companies. In a recent Facebook post, Governor Palin highlighted how the revenues of ACES have benefited the people of the Alaska and have made the state financially sound, as it has helped provide a $12 billion state surplus, put billions is savings, pay down underfunded state pension plans, and forward fund education. ACES has proven to be a success for oil companies as well. ACES has contributed to oil job increases, high profits for industry, a record high numbers of oil companies drilling in Alaska, and increased capital development by oil companies spurred by $3 billion of tax incentives. Alaska now has the second best business tax climate in the country, moving up two spots since the passage of ACES.
In principle I am against this approach.
It is a bottomless slippery slope. If it is OK to tax (confiscate) one sector and simply hand the money over to another, where does it stop? Why don’t the recipients simply vote to raise the tax level and award themselves even more money?
Is this really any different than the liberal “tax the evil rich and give to the virtuous poor”?
Can people envision the near limitless ways this could be applied? Like all government giveaways, it’s great if you are the recipient, bad if you are the involuntary donor.
This could be applied to any industry that could be painted as doing nothing for its profits. Which is pretty much everything as far as libs/socialists are concerned.
It’s pure socialist redistribution at its finest.
“They actually get a check at times if I am not mistaken..at least they claim it on Alaska boards. Are we advocating that on a conservative forum. I have serious hesitation about that. Taxing business to hand out cash to folks.”
So, each alaskan receives a cut of the taxes generated from companies that do business there?
The State collects the taxes and redistributes them to citizens?
The citizens get the money just because they live there? They don’t do anything to earn them?
How is this conservative?
Technically, this is a production tax. The royalty tax is a separate tax to cover the resource itself.
It should be noted that Parnell is working to lower this tax and to change it to a tiered tax system to encourage more production, because the current tax appears to be stifling new production because it can take up to 42% of the profits (again, that’s not including the royalty payments).
Remember that when Palin put her new tax in place, oil prices weren’t nearly as high as they went in late 2008; so what looked reasonable before now is too high a tax rate with the higher oil prices.
This money is from the mineral wealth of the land, something that is owned by the people. And up here in Alaska, mineral wealth is all you have. You cant grow crops, or make lumber, if it ain't mined it just ain't.
How do you share the mineral wealth? Do you just hand the oil over to chevron and say good luck guys? Have a nice life as billionaires? Do you tax them and build roads and schools? Well then, how much do you tax? Do you just say to the government, good luck guys, have a nice life as millionaires and throw us a school or something once and a while?
How about we let the people decide on what to do with 1% of the money taken in! Perhaps people know best what they personally need to survive in this harsh climate. So the Dividend fund came to be. It was done back in the day when people did not trust government as much as we seem to do now.
Might I ask, just how is that hopey changey thing doing down there in the lower 48? Think you might know how to spend your taxes wiser than Obama? Not interested in the mating life of three toed frogs but do want to pay your doctor bills?
In Alaska they know that true stimulus is not having the government spend every dime in everyones pockets.
The people of Alaska OWN the oil in the ground.. NOT THE FEDERAL GOVERNMENT or the oil companies.. The oil companies must PAY to get it out.. and sell it..
The federal gov’t trying to siphon off some of the proceeds is OBSCENE,,, Unconstitutional and just WRONG..
The federal government OWNING LAND in any State is WRONG...
The federal government should OWN only what the States ALLOW THEM TO OWN..
NOT THE OTHER WAY AROUND...