'Fair Share Act' ballot initiative targets oil tax credits
The debate over whether or not Alaska gets its fair share of the state's oil wealth could be going to the ballot box in 2020.
The Fair Share Act is a ballot initiative that would reform Senate Bill 21, eliminating a net production oil tax credits of $8 per barrel, while restoring progressive taxes- specifically for legacy oil fields. Initiative supporters say this model would've generated an additional $1.1 billion for the state in FY2018.
"It's a massive, huge tax give away, for no reason at all," oil and gas attorney Robin Brena said, referring to the 2013 passage of SB21. "We went through $15 billion of our savings while other people were breaking even in our partnership. In terms of how the Fair Share Act will work- the Fair Share Act will produce more than Senate Bill 21."
The language of the Fair Share Act would eliminate net production credits that currently save producers $8 per barrel. The initiative also calls for taxes on any field that currently produces 40,000 barrels of oil a day, and has yielded a collective 400,000,000 barrels in its lifetime.
Only the state's three largest oil fields fall into that category: Prudhoe Bay, Alpine, and the Kuparuk River Oil Fields. Together, these legacy operations make up 90% of the state's oil production.
The tax would sit at 10% when oil prices are at or below $50 per barrel, increasing by 1% for each $5 per-barrel price increase. The tax would max out at 15% anytime oil sits at or above $70 per barrel.
The stance of the Alaska Oil and Gas Association is that the Fair Share Act would discourage future investments. AOGA President Kara Moriarty told KTUU Monday that under SB21, Alaska's oil production has stabilized. Her organization is concerned that these taxes would potentially derail the long-term stabilization of state oil production.
"It's disingenuous to say it won't have an impact on everyone in the industry because everything is interconnected, whether it's through production, opportunities, sharing or the costs of transporting a barrel of oil," Moriarty said. "There's no way any industry in Alaska, especially three companies, can sustain a tax increase of at least 150% -or more depending on the price of oil- and not have an impact on investment."
An application for consideration on the 2020 ballot has been submitted to Lt. Gov Kevin Meyer. He has 60 days to confirm or deny the application. If approved, the group behind the initiative would be tasked with gathering signatures amounting to greater than 10% of the total ballots cast in Alaska's last general election. Out of that total figure, 70% of the signatures would have to come from across 30 separate house districts.