Hilcorp sale will cost state $30 million annually in lost revenue, former tax officials say
James Brooks, Anchorage Daily News, August 28, 2019
Two former directors of Alaska’s tax division and a former state legislator say a gap in Alaska’s corporate income tax system could cost the state millions in lost revenue once a new multibillion-dollar deal between Hilcorp and BP is finalized. The loss could be more than $30 million per year, said Ken Alper, director of the state’s tax division under former Gov. Bill Walker. Alper’s estimate of a $30 million annual loss is based upon information released Tuesday by BP, which said it currently produces 75,000 barrels of oil per day, or about 15% of North Slope production. The share of the state’s corporate income tax levied on oil producers is forecast by the Alaska Department of Revenue to generate $210 million in the fiscal year that started July 1. Fifteen percent of $210 million is $31.5 million. Dickinson said that estimate makes sense but cautioned that “there’s a lot of volatility there” when it comes to income tax revenue. In the state’s 2016 and 2017 fiscal years, tax revenue was negative; by 2018, it was above $65 million per year.
Our Take: The difference between “will” as stated in the headline and “could” as stated by those interviewed is HUGE. Also missing from this story? Any discussion about the potential for MORE production tax revenue for the state. Hilcorp’s specialty is getting more from aging fields.
Here’s a question you should ask about every climate change plan
Bill Gates, Gates Notes, August 27, 2019
I get to learn about lots of different plans for dealing with climate change. It’s part of my job—climate change is the focus of my work with the investment fund Breakthrough Energy Ventures—but it’s just as likely to come up over dinner with friends or at a backyard barbecue. (In Seattle, we get outside as often as we can during the summer, since we know how often it’ll be raining once fall comes.) Whenever I hear an idea for what we can do to keep global warming in check—whether it’s over a conference table or a cheeseburger—I always ask this question: “What’s your plan for steel?” I know it sounds like an odd thing to say, but it opens the door to an important subject that deserves a lot more attention in any conversation about climate change. Making steel and other materials—such as cement, plastic, glass, aluminum, and paper—is the third biggest contributor of greenhouse gases, behind agriculture and making electricity. It’s responsible for a fifth of all emissions. And these emissions will be some of the hardest to get rid of these materials are everywhere in our lives, and we don’t yet have any proven breakthroughs that will give us affordable zero-carbon versions of them. If we’re going to get to zero carbon emissions overall, we have a lot of inventing to do.
Don’t be so quick to write off natural gas
William F. Shugart, II, Washington Examiner, August 28th, 2019
Earlier this month, as temperatures topped 100 degrees and homeowners and businesses cranked up their air conditioning, Texas’ grid struggled to cope with the record demand for electricity. The heat wave was compounded by a loss of power from thousands of wind turbines that couldn’t function on days when not so much as a breeze was blowing. Predictably, energy costs skyrocketed in the Lone Star State. In Houston, as peak electricity demand climbed to record levels, wholesale power prices spiked virtually overnight by an astounding 49,000% (to $9,000 per megawatt-hour). The operator of the electric grid, the Electric Reliability Council of Texas (ERCOT), warned that reserve margins were so dangerously low that it might have to institute rolling blackouts. ERCOT called for the construction of more gas-powered generating plants. Yet, a number of states, most notably California, want to push natural gas out of the picture, putting residents on a collision course with reality. No one should think that the days of burning natural gas for electricity production are numbered, or that gas has been overtaken by solar and wind. America’s vast gas reserves and the development of combined-cycle power plants, using gas and a steam turbine to generate 50% more electricity than traditional gas plants, together with advanced designs and better efficiency will keep natural gas in the energy picture for decades to come.
Our Take: California, slow your roll to ban natural gas…