Morning Headlamp — The AK oil and gas industry, “the proverbial canary in the coal mine”

AK lawmakers delay vote. Sunday, the Alaska House abruptly canceled a scheduled vote on HB247. House Speaker Mike Chenault said that the body simply was “not ready to vote.” Late last week saw a myriad of positions from Alaskan lawmakers leading to the eventual postponement. “I cannot support it,” Rep. Lynn Gattis said in an interview late Sunday. “We should not change tax regimes willy-nilly.” “We feel that we can make a lot of good, substantive changes,” said Rep. Scott Kawasaki, “We are going to work with everybody that’s willing to work with us on the floor to make it a better bill.” In the Senate, the companion version of HB 247 is still in its first of two committees, with just one week to go in the 90-day legislation session.

“It’ll be simply horrible.” Caelus Energy however, was not quiet on Governor Bill Walker’s HB247. In a sharply-worded letter to Governor Bill Walker, Caelus CEO James Musselman blamed not only low oil prices — but also the governor’s efforts to reform Alaska’s oil tax system. “On Monday I’m going to have the very unpleasant task of sitting across the table from smart, hardworking, caring, dedicated, hopeful people, my companions, many of whom I’m honored to call my friends,” Foley told the committee, “and I’m going to explain to them that within a matter of days, their employment will end. And I can assure you, no matter what side of that table you find yourself, it’ll be simply horrible… if the tax system becomes less favorable, it’s going to take a higher price in the future for us to re-initiate our drilling activities.”

Headlamp hopes that the delay in the HB247 vote can give lawmakers time to reconsider what the bill would do to the state. The Governor’s reactionary bill would punish an industry already being hit hard by a low price environment. The bill threatens Alaska’s economy and future private sector investment as seen in Caelus’ sharp critique. Stick with Headlamp as we cover the latest.

Couldn’t have said it better ourselves. AOGA president Kara Moriarty penned a commentary in the Alaska Dispatch News this weekend calling for the state to drop proposed tax increases on the oil and gas industry. According to Moriarty, “the only reason the administration is proposing the sixth fiscal policy change in 11 years is to drum up more money for government. Despite the oil and gas industry being the largest source of the state’s spending money, and by far, the largest taxpayer, the governor and Reps. Gara and Guttenberg want to raise taxes on Alaska’s largest economic driver while the industry is swimming in red ink…In light of Alaska’s fiscal reality, it is unconscionable for the state to actively seek legislation that knowingly makes a bad situation worse.”

 

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First Reads

Alaska House cancels planned vote on oil tax credits bill
Alaska Dispatch News, Nathaniel Herz, April 10, 2016

Caelus Energy announces major cuts, sharply criticizes Walker oil tax bill
Alaska Public Radio News, Rachel Waldholz, April 9, 2016

Alaska can only lose if it boosts taxes, cuts credits for oil industry at low prices
Alaska Dispatch News, Kara Moriarty, April 9, 2016

Oil production is up, but is the state really benefiting from it?
Alaska Dispatch News, Alex DeMarban, April 9, 2016

Alaska Faces a Clear Budget Deficit Without an Evident Solution
New York Times, April 9, 2016