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