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July 30, 2014

Parnell Pounds the Table

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Oil drilling rig in Prudhoe Bay

There’s an old saying, “When the facts are on your side, pound the facts. When the law is on your side, pound the law. When neither is on your side, pound the table.”

But in Alaska, when it comes to cutting oil taxes, that strategy really isn’t a winner.

With all-time high levels of employment and investment on the North Slope, and the oil companies raking in record profits, the facts are definitely not on the side of the Big Oil Tax Giveaway.

With a constitution that requires Alaska to reap the maximum benefit for our natural resources, the law doesn’t favor giving away $2 billion a year in oil tax revenue in exchange for industry commitments of precisely nothing.

And with wishy-washy Capt. Zero at the helm and his merry band of misfit commissioners completely unable to articulate a justification for his giveaway, table pounding is unlikely to provoke anything more than mild amusement.

So, what’s a governor to do when he doesn’t have the facts, the law or intimidation on his side?

First, buy a more compliant and unquestioning Legislature. Thanks to the determined gerrymandering of a redistricting board controlled by Big Oil’s Republican soldiers, that’s Mission Accomplished.

Appearing before the group of oil industry contractors known as the Alaska Support Industry Alliance, Commissioner of Revenue and legislative punching bag Bryan Butcher recently gushed, “I’m so excited about the new Legislature!”

I bet. Legislative leaders are already stacking the relevant committees with people who can be counted on not to ask tough questions.

Even so, with at least a few members of the public paying attention and most Alaskans overwhelmingly opposed to the giveaway, the new Legislature will need some cover. So what did Gov. Giveaway do just this month? He quietly set in motion a scheme to make the Giant Giveaway appear to be a Baby Giveaway.

Here’s how he’s doing it:

Step 1, change how the state estimates future oil production. The governor is required to forecast what he expects oil production to be for the next decade and calculate how much revenue it will bring in.

For years, the state has done this by asking the oil companies, which are legally required to tell us. Because the companies run the fields, one can safely assume their honest forecasts are the most accurate available.

But under the direction of the former Conoco lobbyist who now sits in the governor’s chair, the state has started taking the numbers the oil companies give us and discounting them. As a result, the state now forecasts that by 2017, production will be more than 100,000 barrels a day less than projected just a few months ago.

That new forecast includes zero production from any new finds or shale oil, which some knowledgeable observers say could reach 600,000 barrels a day in the reasonably near future.

This bogus accounting achieves a couple of politically useful things. First, it serves to further scare the electorate into believing Alaska is running out of oil. (The oil companies testified in court recently that they expect the trans-Alaska pipeline to operate until at least 2065. Maybe they plan to ship tundra.)

Second, a projection of less oil going down the pipeline means the governor can shrink the estimates of just how much money he’s actually proposing to throw at the oil companies. The “$2 billion-a-year Giveaway” magically and immediately appears to be hundreds of millions of dollars less.

This sleight of hand works for the outlying years, when projections are more speculative and subject to manipulation, but how can the governor game the estimates for the next couple of years, where they’re more closely tied to known production?

Unfortunately, he has a plan for that too. He’s increasing the state’s estimate of the cost of producing a barrel of oil by nearly 20 percent from what he projected just six months ago. If oil costs more to produce, its value goes down, and so does the expected tax revenue. Under his new, doctored numbers, estimates of the tax revenue for next year have dropped nearly $800 million.

Voila! The amount his tax giveaway will cost us appears to fall still further — way below the reality.

As an added bonus, the scheme provides a pure political benefit to Gov. Giveaway.

Once the Legislature rubber-stamps his tax breaks and actual production turns out to be far better than the state’s new pessimistic estimates, he can claim credit for resurrecting the industry with the Big Giveaway.

“See, my tax breaks worked. We have all this additional oil production and revenue.”

Our hero.

Comments

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Comments
8 Responses to “Parnell Pounds the Table”
  1. The Wolfman says:

    Cry cry cry to the poor house Parnell…that is where you will be not Alaskans…invest in humanity I always say…
    They are much more reliable and honest then you and your cronies are…say how’s that secret society going?

  2. mike from iowa says:

    No offense-but Parnell and the new compliant legislature can “pound” their puds in a male bonding kind of way.They can sit in a circle around Old Glory with the party planner lashed to the pole(for stimulus) and as pols they can exercise tjeir rights and then their lefts. No one would actually be hurt in this exercise and isn’t this basically what most pols do all day,anyway?

  3. juneaudream says:

    Hmmm..just imagine if every..overage, subpar hooker who has had to ..’leave the corp’..suddenly became the pets of..waz-is-name? Imagine the amount of rebotoxing, butt-restructures and silocone-replants that would whirl into active status? If he is doing such a number..on the laws/regs and population at large..howabout he strides to the front of the stage..and offers to ..’reresume’..ladys of the night? As I understand it..once a Pimp…..

  4. Alaska Pi says:

    Great job Shannyn!
    This reminded me of something which took me til now to remember.
    Anyone remember Enron?
    http://en.wikipedia.org/wiki/California_electricity_crisis
    We gonna have our own Alaska version, via the Governor’s office?

    • mike from iowa says:

      Absolutely amazing how de-regulation and privatization bring down consumer costs. Along with tort reform for medical industry,Californians should be getting everything for free. So what’s the problem?

      • Alaska Pi says:

        Enron was John Galt in action :-)
        Sure worked out for CA to be freed of all that stifling regulation and freedom to embrace “market costs” … hehehehe
        Watch out Alaska.
        We will have institutionalized Galtian horsepunky if we let this doof Gov win this shell game.
        Buyer’s remorse is in our near future if we fall for this.

  5. Mudlock says:

    Reminds me of writing papers in highschool. Up the font to 13pts; pull the margins in a bit; up the line spacing; viola! It looks like a real paper.

  6. AKMagpie says:

    I’m sure the IRS will understand completely if I discount my adjusted gross income similarly. Since I am retired, I am pretty sure I will earn less in the future and should be able to take that into account.

    Thanks, Shannyn, for another excellent post. Now on to banning assault weapons.

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