Just say no
Former Anchorage mayor Rick Mystrom has a story he likes to tell. It changes with the crowd and with the years but the basic premise remains the same: A dose of self-depreciating humor to knock down the barrier between the audience and the speaker.
It worked well during his Chugiak-Eagle River Luncheon talk on Feb. 19.
As soon Mystrom loosened everyone up in the standing room only crowd at the Eagle River Ale House, he veered over to his intended topic: The Vote No on 1 campaign.
Proposition 1, up for a vote on this year’s election ballot, is a controversial measure that works to repeal SB 21, which passed last year.
Also referred to as the oil and gas productive tax, SB 21 grants a tax break to oil companies. Under the previous tax code, oil companies paid 25 percent on the first $30 of net profits plus an additional 0.4 percent increase for each $1 of profit per barrel.
SB 21, however, changed all of that to a base rate of 35 percent and did away with the extra percentage point tax.
Opponents claim that Alaska’s old tax structure encouraged a less lucrative and competitive investment atmosphere, especially when it came to luring in prospective oil ventures.
Supporters of the Vote Yes, Repeal the Giveaway! however, believe that SB 21 will put an estimated $4.6 billion of Alaska’s money in the oil companies’ pockets in the next five years.
According to Mystrom, Proposition 1 is a threat to Alaska’s future.
“We’ve had a great ride here in Alaska and that’s mostly because of the partnership with the oil industry,” he said.
Without oil, he added, our economy would be half the size as it is now.
He threw out a few statistics to emphasize his point: That one third of all Alaska jobs and 90 percent of state tax revenues can be attributed to the oil and gas industry. That since 1982, $35,143 per person has been paid out in Permanent Fund Dividend checks. That Alaska has no state income or sales taxes, thanks largely to the oil industry.
Oil production is currently down to approximately 500,000 barrels a day, about a quarter of earlier production rates.
Yet that’s not the whole story.
“Only Alaska (oil) production declined in 2012,” Mystrom said.
According to his estimates, other oil producing states such as Oklahoma, Utah, Mississippi, Texas and Colorado are still holding strong.
“I was in New Mexico and the Albuquerque Journal said that New Mexico is about to pass Alaska in oil production.” he said. “New Mexico,” he repeated, shaking his head.
All taxed up
The state’s complicated oil tax is one of the main reasons Alaska has lost its oil reign clout, Mystrom said.
This structure hasn’t increased production, he said. In fact, it’s done the opposite—it’s chilled the investment climate.
But SB 21 is paving the way toward better things, he said. British Petroleum plans on investing more, Repsol hopes to add three more wells and ConocoPhillips is planning a new drill site at the Kuparuk River.
“There are a lot more places companies can invest in other than Alaska,” he said. “They can invest in 16 other states.”
Yet according to Mystrom, if Proposition 1 passes, the economy will shrink and there will be a lot less jobs.
“It will be a very discouraging place,” he said.
Vote Yes, Repeal the Giveaway! supporters, backed by Vic Fischer, Bella Hammond and Jim Whitaker, believe otherwise.
According to them, SB 21 weighs the interests, and the profits, of oil companies over the good of the Alaskan people.
“Senate Bill 21 guarantees immediate deficit spending and threatens to impoverish our state while enriching Outside corporations and their shareholders,” they state on their Website.
After talk was over, lunch goers pulled on their coats and headed back to work. On the way out, they passed a table covered with “Vote No on 1” freebies including pens, refrigerator magnets, stickers and a handy little ice scraper.
“Cool,” a man in a suit said, slipping one into his pocket without bothering to read the jaunty label.