Alaska’s Future: It’s Under Our Feet Juneau Chamber of Commerce February 9, 2012 Kara Moriarty, Executive Director
AOGA Member Companies
Oil & Gas Has been Good to Alaska – Jobs & Revenue • State of Alaska has collected over $160 billion from oil & gas since 1959 – 98% of all state revenues have been from natural resources – Oil & gas continue to dominate state’s unrestricted revenue, accounting for 92% ($7 billion) in FY 2011. TOTAL Revenue to Alaska – Including Restricted Revenue: Production Taxes: $4.5 billion Royalties & Bonuses (including to Perm Fund): $2.9 billion Property Taxes: $586 million Corporate Income Taxes: $542 million – State estimates 90% of its revenue will continue to come from oil and gas – even with falling production
Jobs for Alaskans- One-Third Tied to Oil & Gas 122,000 34%
Rich In Resources
Production Decline Is Real Serious Consequences
Alaska’s Tax Structure: How Bad is it? “Your state has about the worst energy tax policy in the world. The only worse I could find is North Korea.” -Economist Steve Forbes at the Anchorage Economic Development Corporation’s economic forecast luncheon on January 25, 2012.
The Worst Tax Rates in North America Oil Tax Rates • Alaska: 76% • Alberta: 55% • Gulf of Mexico: 43% Source: Roger Marks, Alaska Legislative Oil Tax Analyst Other oil producing areas are booming! • North Dakota • Texas • Alberta
The Worst Tax Rates in North America Effective Tax Rate at $115/bbl Market Price (all taxes & royalties) 90% 80% Effective Tax Rate 70% 60% 50% 40% 30% Source: Roger Marks, 2/8/12 Presentation
The Worst Tax Rates in North America Effective Tax Rate (all taxes & royalties) (tax / net value) 80% 75% Effective Tax Rate 70% 65% 60% 55% 50% $50 $60 $70 $80 $90 $100 $110 $120 $130 $140 $150 ANS Market Price ($/bbl) Source: Roger Marks, 2/8/12 Presentation
Development Takes Time Fields Discovery Sanction First Oil Nikaitchuq 2004 2008 2011 Oooguruk 2003 2006 2008 Liberty 1997 2008 2012 Alpine West (CD 5) 2001 ??? ??? Fiord 1999 2004 2006 Nanuq 2001 2004 2006
Development Takes Time
A Grim Future Without Oil & Gas Declining production + oil market crash= a complete disaster for Alaska • Draconian cuts to state services • No tax base to tap into • Rural areas devastated • Spend the Permanent Fund • Alaska applies to the federal government to return to territorial status Source: ISER’s Scott Goldsmith “Four Scenarios for Alaska’s Future”
A Grim Future Without Oil & Gas Sources of FY 2011 Unrestricted Revenue Oil and Gas Royalties & Taxes ($7B) 92% Excise Taxes ($165M) 2% Corporate Income Taxes ($157M) 2% Mining Taxes ($49M) .6% Licenses & Permits ($43M) .6% Fisheries Taxes ($23M) .2% Source: Alaska Department of Revenue – Fall 2011 Sources Book
What needs to happen? Alaska’s Oil Tax Structure Must Change • Real, meaningful changes are needed to jumpstart production •Legislation that does not provide for these changes will not earn industry support •Spirit of cooperation must rule the day
Reforming Oil Taxes is Governor Parnell’s #1 Economic Priority Do you stand with the Governor? • Contact your legislator • Write a letter to the editor • Talk to your friends and neighbors • Follow AOGA on facebook and twitter
The solution?
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