“I’m all for the independents, that’s why I encourage and applaud the
uplift feature to keep, hopefully in their minds, this competitive.”
– Co-Chair Andy Josephson (3/17 House Resources Committee, 1:16:18)
“Our goal is stability for the industry and, you know, to get more oil into
the pipeline. And I heard Admiral Barrett just loud and clear like all of
you that that’s got to be a priority for both our revenue and what’s
necessary to maintain that critical infrastructure.” – Co-Chair Geran Tarr
(3/17 House Resources Committee, 1:21:34)
Headlamp wishes the actions of the House Resources Committee Co-Chair’s would reflect their words. But alas, they do not. Yesterday, they passed the Committee Substitute for House Bill (CSHB) 111 from Committee on a caucus line vote, never ceasing to amaze us with their ability to move legislation designed to harm the industry that remains the lifeblood of our state.
In recent weeks, the Committee heard hours of public testimony from local governments, native corporations, numerous businesses, big and small, and individual Alaskans both directly and indirectly involved in the oil and gas business. The majority of the testimony was against changes to Alaska’s tax structure, because it would be the seventh major tax change in 12 years and most importantly because the current structure is working! (See ConocoPhillips and Willow; Caelus and Smith Bay; Repsol and Armstrong’s Horseshoe)
Headlamp is perplexed by the Committee’s interpretation of public testimony, as the bill they moved forward proves they believe elected officials, some with little to no private sector experience, know better than the men and women who power Alaska’s economy on a daily basis.
It gets worse. CSHB 111 calls for a new bureaucratic nightmare by asking the Department of Natural Resources (DNR) to create an overbearing pre-approval process for the industry. As the Alaska Oil and Gas Association said in their press release, “the new regulations will mean almost every penny of every proposed investment in the state’s largest private-sector industry would need to be pre-approved by the State of Alaska before the expenditure could happen.”
Well, Headlamp feels better, don’t you?
When listening to the hearing yesterday, we were almost amused by Rep. Josephson’s declaration of his support for the independents and pointing to the “uplift feature” as proof. He’s right in that their $35,000 consultant did recommend an uplift on capital costs: a common practice where a deduction is increased by a given percentage of the actual cost.
But CSHB 111 would take real losses, knock them in half, increase it with interest for a few years and call it an uplift. Only in the Majority led House Resources Committee could they cut something in half and call it uplift. What they’ve really created is a “down lift,” something unheard of elsewhere.
Co-Chairs Josephson and Tarr can continue to pay lip service to the oil and gas industry, but their actions speak louder than their words. Birthday cakes celebrating the 40th Anniversary of TAPS are only sweet if they are accompanied by positive actions. Headlamp continues to advocate for “do no harm” policies that encourage investment and increase production. CSHB 111 fails on all accounts.