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April 19, 2014

Alaska Governor Sean Parnell’s Big Oil Bailout

~Senator Bill Wielechowski explains ACES

*ATTENTION BLOGGERS – If you have a blog, and would like to repost this article in its entirety including links, photos, and attribution, please feel free to do so. This is important information, and it’s never easy going against the well-funded falsehoods continually pushed forward by the oil companies. Often, the truth is free and the lies cost a lot of money. So, help yourself and pass it on. You can also post the link in your Facebook page, or post the link in a Tweet. Thanks!

 

By Thomas Dewar and Jeanne Devon

“Each of us is entitled to his own opinion, but not to his own facts.”
—Daniel Patrick Moynihan

“I can hire one half of the working class to kill the other half.”
—Jay Gould, 19th Century Robber Baron

School kids from across Alaska recently took a trip to the Capitol in Juneau to beg for needed classroom resources.

ConocoPhillips just boasted a single year’s profits of $1.75 billion from Alaska alone, and insists it’s not enough, demanding more money from the state.

Guess which of these two groups was told “no,” and which has found a compliant concierge In the Governor’s Mansion? You probably already know the answer, but read on anyway, because you’ll learn other interesting things along the way.

Divide & Conquer

In state capitals across the nation, a calculated strategy seeks to pit neighbor against neighbor, so some of the most profitable corporations in history can abscond with ever more money from already ailing state and local budgets.

Facts, it’s been said, are stubborn things. And from New Jersey to Wisconsin to Alaska, a particular brand of regressive and reactionary dogma is colliding face-first with facts that can be known and proven and ironically, can be supported by the former’s own data.

To fuel a reactionary “divide and conquer” strategy, Wisconsinites are being told that their governor is simply and reasonably asking those pampered state workers to contribute to their own retirement. “Bless his heart,” says Sarah Palin, “that Wisconsin governor is doing all he can to make his state solvent.” Nevermind that their pensions are already self-funded without a dime of taxpayer money. Nevermind that they’ve agreed to accept the financial concessions demanded by the Governor. Sometimes outright lies are what’s required to deflect attention from the hundreds of millions of dollars in corporate giveaways that broke the budget, and shift suspicion onto the working mom next door whose union contract provided her and her kids with a flamboyant amount of health care.

Which brings us to the backlash. Nationally, thinking people began to wonder why, after corporate America’s most profitable quarter in history, and executive compensation skyrocketing north to record-setting levels, was the unemployment needle still stuck just below 10%? If we just did what was good for big business, wouldn’t then (to borrow a Scott McAdams riff) “the capitalist fairy come down and sprinkle us with pixie dust?”

Not so much, it turns out.

Nowhere is this epic collision between facts and the common good on one side, versus rapacious greed and blatant, easily disprovable lies on the other, on more vivid display than in Alaska—the nation’s most resource rich state, whose residents nonetheless pay more at the pump than motorists in the Lower 48.
Governor Parnell now tells us the most pressing fiscal matter before us is to ensure some of the most profitable corporations on the planet receive additional breaks. Yes, even if those breaks come at the expense of those supplicating apple-cheeked school kids and their teachers. Even if, when pressed on the matter, the oil companies who supposedly need bailing out refuse to commit that their additional loot will actually lead to any more jobs or any investment in the state. “Just give us the money, and we’ll see how it goes,” we’re told. Would you gamble billions on those odds?

ConocoPhillips, mopping their sweaty brow from raking in a single year’s profits of $1.75 billion in Alaska alone, does not believe its share of Alaska’s resources is enough. As a matter of fact, they’d like to shift more of the state’s tax burden to you. Over the past 5 years, and overlapping with ACES (Alaska’s Clear and Equitable Share), Conoco CEO James Mulva has had to make do on $95.2 million in compensation. Poor baby. One can see how this would make him have a sad.

If doing whatever was good for Big Oil’s bottom line was inherently good for average Alaskans, why then would this industry need to saturate the state’s airwaves with ads convincing us of it? Why spend that much to blackmail viewers with threats of the ad’s telegenic little girl growing up to find a dry pipeline? Because it costs more to make people believe lies.

The shady socializing of risk and privatizing of profit has been intuited by most Alaskans on a gut level for some time. We even thought for ourselves and voted for a little cruise ship tax despite a zillion dollar ad campaign telling us that nobody would ever come to Alaska if they had to add $50 to the price of their multi-thousand dollar cruise ticket.
But while the issue of oil taxation is more complex than a $50 cruise ship tax, it’s actually easier to grasp than the oil companies and their newly acquired legislators would have you believe. Enter Senator Bill Wielechowski.

On this week’s broadcast of Moore Up North, Alaskans were urged to use their common sense again.

 

“…and a youth shall lead them.” (Isaiah 11:6)

Facts are stubborn things and Sen. Wielechowski is, it turns out, a stubborn man. And this is a very good thing for Alaskans. From the stage of the Tap Root Cafe, the senator systematically dismantled talking point after talking point from the oil companies, and their lobbyists – including Governor Parnell.

Singular in their devastation of every false premise, assumption, and talking point by Big Oil and its advocate in the Governor’s Mansion were two graphs.

“Refudiating” the premise that Alaska’s tax climate is just too unstable and confiscatory to promote investment and economic growth, take note that the very companies spinning this line are currently investing in Russia, Libya (!) and other, significantly less stable regimes, with tax rates in the 90% range:

 

 

And the effective tax rate in the wild, unstable war-torn dictatorial hell hole of Alaska, USA?  About 30%. Yes, just 30%.

This might explain why a brand new player has entered the scene under ACES, making a big announcement just yesterday.

Spanish oil major Repsol announced it had acquired a 70-percent stake in several exploration blocks in Alaska, where it plans to invest around 550 million euros.

“This deal forms part of our strategy to incorporate new and high quality exploration sites into our portfolio,” Repsol chairman Antonio Brufau said in a statement released by the group. It is also “part of our strategy to balance our exploration portfolio with low risk assets through onshore opportunities in a stable environment,” he explained.

And then there’s Great Bear Petroleum, another company that has leased half a million acres of onshore exploration sites in Alaska, that also made the announcement this week. The President of Great Bear, Ed Duncan effused about the area which falls under ACES, “Alaska’s resource base is global in scale. It’s an international oil and gas player,” adding that Great Bear “is built around building Alaska back  to where it should be … where it was just a few short years ago. Not preoccupied with North Dakota or South Texas or the Northeast U.S.”

If you listen really carefully you can hear the sound of a talking point imploding.

Now to the correlation between tax rates for Big Oil and job growth in the state.  As you can see from the next chart, employment was it its low point at the very time of the zero percent tax rate. ZERO. But under ACES, job growth has climbed steadily north over a period of years.  And who created this little chart?  That would be Governor Parnell’s office.  There goes another talking point. >poof<

It would be interesting to hear the industry’s response to these damningly inconvenient facts, but we shouldn’t hold our breath for anything beyond the vapid, content-free spin, no longer distinguishable from overt extortion.

This is not a partisan issue. Former Governor Palin called ACES her “crowning achievement,” and was able to pass it with broad bipartisan support including Democrats who ensured the legislation would become reality. The Anchorage Daily News, furthermore, reports that Republican House Speaker Mike Chenault has doubts & skepticism about the proposed bailout for Big Oil. The ADN piece also reports the Speaker’s fellow Republican, Rep. Paul Seaton of Homer, is voicing doubts about the billions the state will lose:

Seaton disputed the main argument for the tax break—that it would encourage new drilling and other investments on the North Slope.

Drilling activity in years past has never followed changes in Alaska’s tax regime, whether rising or falling, he said. Investments follow oil company plans for field development, not tax codes, he said.

He cited recent proposals by an independent oil company, Great Bear Petroleum, that are       going ahead in Alaska without the incentive of tax breaks.

“The tax bill that we’ve got before us, none of that money is going to go there,” Seaton said. “The money is going to go to the current producers who have put not one plan of development, or accelerated development, on the table.”

Tea Party activists, hostile to corporate bailouts and crony capitalism, should likewise be with Senator Wielechowski on this one.

Here is the full broadcast of Moore Up North – must see TV for Alaska’s future. Contact your legislators and tell them you know ACES is working, and that the oil companies don’t need a bailout at your expense.

Part 1

“>PART 2
“>PART 3
PART 4

You can download the  Powerpoint slides here

and .pdfs here.

~Bill Wielechowski and Shannyn Moore on the set of Moore Up North

Comments

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Comments
31 Responses to “Alaska Governor Sean Parnell’s Big Oil Bailout”
  1. Poonchkie says:

    If the past 3 decades have proven anything, it’s that the American people are asleep at the switch. We have seen the rise in political corruption and corporate power on a national level, so much so that it is open and common practice for politicians to take bribes in the disguise of campaign contributions for their cooperation with the scams perpetrated by their corporate masters. We watch as schools are closed and tuitions go up to the point that only the rich have access to education, healthcare and a government that only works for them. Parnell is a corporate lapdog just like the rest of them. They have so much power that they can kill people with their products, poison the environment, usurp private property and run roughshod over any group or person that challenges their power. They own the supreme court and every politician regardless of affiliation. Since the supreme court gave constitutional protection to corporations politicians are bailing like mad to get on the gravy train that will flow from our corporate overlords.

    The attack on any institution that looks out for the American people has been successful in vilifying NPR, ACORN, Planned Parenthood and the rights of poor, middle-class and working families. We live in strange times and the voices of the people are being silenced while the corporate media controls all that you see and hear.

    It’s past time for Alaskans to stand up for themselves and demand a voice. It’s time to move the capital from Juneau to Anchorage or anywhere on the road system so that citizens can have access to our elected officials. It’s time to stand up to the divisive rhetoric of the lunatic fringe who have, in succession, vilified Muslims, Hispanics, Gays, the poor and now they have moved back to Blacks.

    The tax cuts for the rich, the gutting of clean air/water legislation, the attacks on unions, the endless wars and corporate welfare will bankrupt the country.

  2. Well that answered the query of where you got the second tier scotch. This story should remone all doubt about who actually governs the states.(hint-it ain’t politicians)

  3. #4 = good perspective. Hey, back in the 1960′s I heard from an international executive involved in chemicals exactly how oil companies bought off US congressmen via rewarding their families, to make traceablility difficult. They would not break a sweat to control our puny legislature — esp. in a state where zero investigation occurs because we don’t have a publicly elected attorney general who serves the people.

    Another point, Jeanne has to go with reported stats, but does anyone really believe the true unemployment rate is under 10%? Or more like 18-22%!? Jeanne does a great writing job here, and gets to the real point of spending to control “perception” – which is well known in marketing (and war) to be far more important than “reality.” This and other articles, just like the global revolutions occurring with increasing pace (“Flash Points”) are stripping the venier off the disinformation and propaganda wordsmithing of One World rule (with a few bankers in top position) and Corporatism (the kleptocracy that serves it) and exposing who OUR Congress really works for… while exposing the truth of massive global enslavement.

    The future is OURS – the People’s – and it is time to rise up and claim it, to raise fists in solidarity, and to send Ramras and other sycophants packing their duffle for a life on a park bench begging for a McD’s burger and some Thunderbird to drown the sorrows of their eventual failure. They cannot beat OUR endurance and tenacity to truth.

    Keep writing Jeanne!

  4. Bretta says:

    Thank you for this – I’m still reading it, but thanks!

  5. Really? says:

    Thank you for the understandable information. I’m writing my POM (public opinion message) soon and will send it to all .

  6. Kenneth D. Franks says:

    I’m re-posting this now in Texas. Thanks for the information

  7. Laurie says:

    “Socializing risk and privatizing profit”. When will Americans wake up?

  8. Kelly Walters says:

    If HB110 and SB49 become law, Alaska will be in deficit spending mode in a couple years. Within five years, our $12 billion savings account will be wiped out. Once that happens and we have no revenue coming in, how long until the Permanent Fund is raided? How long till we see new unprecedented statewide taxes-covering income, property, sales, and whatever else they can think of?

    And consider this, Norway has less oil than Alaska. They started their Permanent Fund in 1990, the year AFTER the Exxon Valdez disaster and 14 years after the Alaska Permanent Fund was established. Yet, Norway has $560 BILLION DOLLARS! Alaska has $38 BILLION DOLLARS! Norway somehow managed to sock away $522 BILLION more than our Permanent Fund. How is that possible, you ask? Because they are getting their FAIR SHARE! And you know what? Norway’s taxes are higher than ours. And even though they have less oil than we do, Oil Producers are investing there!

    Imagine if we had been getting our FAIR SHARE since 1976. What would our fund be? What if we had what Norway has now? We would have $28,000,000,000 for state government just off of a lousy 5% return! Even a free-spender like Governor Parnell would be hard-pressed to spend all of that!

  9. Mo says:

    Sitting in my ice cave pushing shards around trying to make a pattern…

    This:
    UAA economist gives take [sic - did they mean "talk" or "opinion"] on oil influence
    http://www.juneauempire.com/stories/030911/loc_796713884.shtml

    “This is where Alaska’s oil market comes in, which Goldsmith estimated has created 60,000 jobs directly or indirectly as of 2007. He credits this job creation to high petroleum wages, which can average more than $100,000 per year. He compared this to tourism wages, which can average $29,000 annually but still often will last only a few months in a year, to demonstrate that oil is more relevant to permanent job structures and increasing purchasing power. ”

    and this:
    http://rortybomb.wordpress.com/2011/03/07/some-thoughts-on-the-expanding-service-industry-nickel-and-dimed-decent-jobs-pity-charity-liberalism/

    “Ehrenreich’s book is important for many reasons, but two jump out. First is that it challenges the economic (but also political) notion of what constitutes skills. The second one I want to focus on is that service industry work is difficult not just because of the low pay – though that is important – but because it is a degrading experience. The things people value about their work – the sense of autonomy, dignity, security and responsibility, the ability to participate in production with the virtues of a craftsman – is what is explicitly missing in the current low-wage service industry. ”

    I keep adding 1 + 1 and getting 0. Thought, anyone, after reading these articles?

    • All I Saw says:

      Spend some time looking through the tactics (i.e. federal programs) that effectively separate populations from their food supply.

      Fisheries is a multi-billion dollar business, Alaska is a money tree for commercial fisheries.

      If they scale back subsistence rights, and remote populations are dependent on a cash dollar system to feed themselves (vs. the backyard pantry) they become slaves to the outside investors in their (historical) common property.

      It’s an awful lot of profit to forfeit to just leave it in its “natural state”. It must be highly managed, with maps and economic reports from “leading economists” that all come to the same conclusion.

      Smart business people (and politicos) deserve to make lots and lots of money off fisheries because the indigenous/rural populations aren’t capable of “extracting” maximum value.

      It’s nothing short of genocidal IMHO.

  10. A Fan in CA says:

    Great information. Here in the great oil producing state of CA we have no state wide depletion tax. In Los Angeles the voters are being asked to add a tax but the results are too close to call. Yes, there are wells in many parts of the city.

    In CA we could solve a lot of our budget problems if we just taxed the extraction. But the issue is kept moot. As one of the top oil producers it would be a great way to pay for services but I can imagine the fight.

  11. ks sunflower says:

    Excellent commentary, well researched and well written. Thank you.

  12. ManxMamma says:

    Excellent post. Thank you.

  13. Kelly Walters says:

    Great piece Thomas and Jeanne…and Shannyn too for the Moore Up North. There is NOTHING more urgent and important than stopping HB110 and senate companion SB49.

    Thank you so much for the research and the absolute great great writing!

  14. LAMBFORGOVERNOR says:

    Big Oil:
    (Speaking)
    What’s good for Big Oil is what’s good for Alaska and the U.S.A.
    And by Dow Jones and all their little averages,
    Don’t you forget it! Right, boys?

    Parnell:
    (Singing)
    Right!
    Three rousing rahs and a few hussahs
    And a hip-hip-hip hooray
    What’s good for Big Oil
    Is good for Alaska and the U.S.A.

    Part 2:

    Big Oil:
    (Speaking)
    We’ll show these hillbillies what’s what!
    Right, boys?

    All the Big Oil Lackeys:
    (Singing)
    Right!
    He makes the rules
    And he intends to keep it that-a-way
    What’s good for Big Oil
    Is good for Alaska and the U.S.A.

    Part 3:

    Big Oil:
    (Speaking)
    Good. Then proceed as planned.
    Right, boys?

    All the Big Oil Lackeys:
    (Singing)
    Right!
    He calls the shots
    And he expects to keep it that away
    What’s good for Big Oil
    Is good for Alaska and the U.S.A.

  15. fishingmamma says:

    The current tax structure has not chased anyone out of Alaska. All of the players are still here, Mobil, Conoco, BP, Still here.

    The Governor would do much better if he were to work to diversify the economy, heading into ecotourism, wind energy, arctic food security, and improved fisheries, and let the oil companies pay for the diversification, instead of hanging on to the misguided belief that they will invest tax breaks into our state. They will take the tax breaks and add them to their already obscene profits.

    He is part of a fading public policy. The world has passed him by, and it is time to let him know that.

  16. Homesteader says:

    Keep up the good work, AKM.

  17. luckycharms says:

    With zero promises we’d get new jobs or investment out of it. What improvement do they suggest? Where are all the other slides? Regurgitating a talking point.

    The fact that Repsol just invested more than Conoco did last year hardly sounds like we’re closed for business. Common sense, please.

  18. Bob.Benner says:

    The article states “Facts are stubborn things and Sen. Wielechowski is, it turns out, a stubborn man.”
    So true.. Sen. Wielechowski still thinks the AGIA debacle has legs… Now THAT’s stubborn…
    ===========================================
    The blast at the evil giant Conoco Phillips profits in Alaska remind me of the logic people used when they first man on the moon… Suddenly, everything in the world was supposed to be right (or in this case paid for)… i.e. If they can put a man on the moon, why can’t they make a good cup of coffee??? (Why is there even one person out of work in Alaska if Conoco Phillips is making a profit???)
    =============================================
    But this was my favorite part of the article: “And then there’s Great Bear Petroleum, another company that has leased half a million acres of onshore exploration sites in Alaska, that also made the announcement this week. The President of Great Bear, Ed Duncan effused about the area which falls under ACES, “Alaska’s resource base is global in scale. It’s an international oil and gas player,” adding that Great Bear “is built around building Alaska back to where it should be … where it was just a few short years ago. Not preoccupied with North Dakota or South Texas or the Northeast U.S.”
    What the article doesn’t mention is Slide 23 of the Great Bear presentation which stated, “discovery and development of Alaska’s remaining potential would be significantly enhanced by improvements in Alaska’s fiscal terms.” Slide 24 was the well known Wood McKenzie chart showing Alaska ranks 129 out of 141 in global investment competitiveness.
    Source for slides:
    http://www.andrewhalcro.com/tuesdays_drive_by_shoutings

  19. VernD says:

    I heard the legislator who introduced the bill to de-fund the CPB and public broadcasting as a whole state that …. Public Broadcasting has been supported long enough and should be able to survive on it’s own.

    Hmmmmmm………..

    VernD

  20. Krubozumo Nyankoye says:

    Beautifully done. It is pretty clear is it not that someone is gaming the system and it is not the “little people”. I cannot speak for the oil industry because I am not involved in it now and was only briefly and peripherally. But in other major investments such as mining, long term taxes are rarely much of a consideration. There are much more significant uncertainties that must be weighed.

    The first graph here shows that Alaska’s petroleum taxes are generously small with other producing reqions but there is some uncertainty about what exactly is being compared. The title subhead says changes in government take but that is very hard to interpret. The percentages are impressive, but in the context of what the absolute tax rate on net profits or net production are, it is hard to relate. What does government take mean exactly? The net revenues to the government? The tax rates? There is no way of knowing, so I think this needs to be carefully clarified so that the graph clearly relates to the discussion in the text, otherwise many people may draw wrong conclusions.

    It would be helpful if there was more known about the current conditions prevailing at AKs established oil fields. Feinberg Research might be a site with some historical background that would afford an insight as to the state of things. The main question is, at what point are the established fields in terms of recovery methods? As a reservoir is developed the expense of producing more oil increases. As I suggested in a previous comment on another thread, it may be in AKs interest to encourage the conservation of the state’s oil resources. Not the exploitation.

    Something that might be worth including here is that the oil companies have almost unlimited latitude to game the overall market as well and they have highly refined (excuse the pun) methods of doing so. The deregulation of the commodities futures markets corresponds closely to the enormous rise in the price of crude oil as a commodity and the corresponding enormous rise in the profits of major oil producers. Furthermore producers are also for the most part monopolistic refiners as well, and they can manipulate their tax liabilities accordingly. Someone please correct me if I am wrong but I believe the only refining facility in Alaska is owned by Koch Industries is it not? Hence they have an absolute monopoly on the price of all consumer petroleum prices in the state. Yet another means of extracting more profit is the instantaneous propagation of price changes to end products. It takes a finite amount of time to move a given volume of crude oil from its source to a refinery, and a finite time to refine it, and then ship it to distribution points which in turn ship it to vendors where it is sold. So if a change in price of the raw stock is reflected instanteously in a change in price of the end product, the margin on the whole volume of product in the system is increased. In other words gas in the tank at a vendor that cost $1.50 to produce and sold for $2.00 a day ago, can suddenly be sold for $2.50 and so on.

    All in all this is a very significant milestone for AKM I think, and I offer my suggestions here to help improve it.

    • Kelly Walters says:

      Great Point, Krubozumo Nyankoye!
      AND…It was Senator Bill Wielechowski that tried to pass anti-price gouging legislation. But Jay Ramrass and others blocked it after “investigating” Flint Hills alleged price gouging in klassic kangaroo fashion!

      In my nearly 20 years in Alaska, prices at the pump have always been within a nickle or so of Seattle. But ever since the $4 a gallon gas debacle in 2008, prices in the lower 48 went back down to $2.30 or so a gallon while Alaska hovered around $3.30 or so. Our gas prices have never gone back down.

      They need to shut off speculation. The 2000 Commodities and Futures Modernization Act completely deregulated futures and allowed speculators to drive up the price of a barrel of oil…and that is how Mulva makes $92 million dollars a year.

      And that’s another point. What’s the average employee make a year at BP? $50,000? $75,000? Either figure, the BP CEO is making over a thousand times the average employee at BP-assuming the average is either figure. At $75,000 Mulva is making 1,227 times the average and at $50,000, Mulva is making 1,840 times the average employee.

      When we had a strong middle class, the CEO make 25-40 times the average worker. If $50,000 is the average pay, Mulva would have made 1,250,000-$2,000,000. If the average is $75,000, Mulva would be making $1,875,000-$3,000,000.

      I think he could live on that…

  21. E of Anc P says:

    Thanks for putting this out…I’m certainly going to e-mail your “link” onto friends and family. I was able to watch Senator Wielechowski on “Moore Up North” and was hoping someone would write it up.

    Thank you!

  22. Whatever it is that is going on, it certainly is everywhere. The good thing is, it is getting easier and easier to identify.

  23. Zyxomma says:

    Wow. Just wow.

    • SmallStepsinVA says:

      Wow. Just wow.

      Love the Moynihan quote. I have it paraphrased on a necklace I wear. I will retweet, link on my facebook page and link on my blog. Happy to help spread the word.

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