As you listen to the Walker administration and legislators question the value of oil and gas tax credits and claim that there is NO return on investment to the state – don’t believe it. Credits provide a litany of benefits to the private sector, local governments, and state treasury. Below are just a few of these benefits:
- Cook Inlet oil production has doubled since 2010.
- Credits have helped bring new companies like BlueCrest Energy, Furie, Hilcorp, Caelus, Brooks Range, and Armstrong to Alaska.
- Credits have led to the potential for more than 150,000 new barrels of oil per day to be put in the pipeline – if the state doesn’t kill the program.
- On the Kenai, assessed property value of oil and gas property is over $1.4B; double what is was in 2006.
- South Central Alaska no longer faces ‘brown outs’ and is no longer contemplating importing natural gas. Cheaper gas is now also being supplied to South Central consumers due to the increased supply.
- Fairbanks can look to Cook Inlet for a reliable, affordable supply of natural gas.
- New streams of revenue have been created for local governments.
- Royalty payments to the State are up and are projected to continue increasing over the next 10 years.
It’s also important to remember the work a company must do and the amount of money they must invest in our state before they can apply for a tax credit:
Credits are not handouts, nor do they fail to provide the state a return on investment (ROI). Jobs, new production of oil and gas, and new income streams are returns on investment. When looking at specific projects it becomes clear that credits (over the long run) provide significant returns to the state treasury.
In this project involving BlueCrest Energy, the state recoups its entire investment in 5 years:
Alaska’s oil and gas tax credit system has proven to be very successful at attracting new investment (billions of dollars), growing our economy, and increasing production both on the North Slope and in Cook Inlet. For these reasons the Alliance opposes HB 247.