Big Oil's Still Big Oil

[This began at the end of the previous post on the state censoring a blog, but it got so long I decided to make it a separate post.]


While you check out Alaskan Abroad, don't skip the letter "consultant Daniel Johnston recently sent to legislators." I quote in part:

For those of you who had to suffer through my testimony the past two years you will recall numerous references to risky places like Libya, Kazakhstan, Algeria and Russia where the government share of profits ("take") was in the high eighties i.e. around 85+%.

So now Alaska is considering a change to the petroleum profits tax which will add another 1% or so to Government take. Yawn. [emphasis mine]

This, as we read in today's Anchorage Daily News that Rep. Mike Chenault of Nikiski "successfully pushed through an amendment to bring the rate back down to 22.5 percent." And, "Rep. Mike Hawker objected to raising the tax." If it weren't for Rep. Mike Doogen, I'd be wondering if we shouldn't make Mikes ineligible for the legislature.

These guys are still buying the oil companies' arguments that they will leave for easier pickings. If that's the case, why aren't the oil companies answering the questions about their Alaska profits?

Several state legislators, including Senate Judiciary Committee Chairman Hollis French, D-Anchorage, and House Resources Committee Co-Chairman Carl Gatto, R-Palmer, have unsuccessfully tried to press the companies for cost and profit information specifically for Alaska.

They've found those who produce oil in Alaska don't like to talk about their profits in the state, and in some cases won't say anything.

Do the Mikes really believe their line about their accounting doesn't break out Alaska finances separately? They're playing hardball and you guys are blinking.

We've watched the surveillance tapes. We know what goes on. Mikes, is your free market ideology blocking your common sense? The free market posits two parties making a deal. The oil companies are making a deal. They are offering much lower than they are willing to settle for. They'd be stupid if they offered their last best level first. And the state, the owner of the oil, this scarce commodity that is now pushing $100/barrel, is the other actor. It should be asking much higher than it's willing to settle for. Given what the oil companies are paying elsewhere, it should be a lot more than 25%. Either you guys are a little slow on how the game is played or you've got reasons to push the oil company line that you aren't sharing.


Call your legislators and tell them not to sell out the state. If this oil was in your back yard, would you settle for 22.5% of the profits and let the guys who got it to market take all the rest, minus their costs? Sure you would.

Remember, these Republican legislators are the same people who have kept Randy Ruedrich as their party chairman. This is the guy Sarah Palin filed ethics complaints against when she quit the Interstate Oil and Gas Compact Commission.