Handouts should not be a part

of pipeline deal

Thursday was another banner day for the oil industry. Despite industry alarm over production stoppages and slow-downs in the Gulf of Mexico after a series of hurricanes blew through the area, both Exxon Mobil Corp. and Royal Dutch Shell PLC posted their best quarterly results in history.

Exxon became the first U.S. company to ring up quarterly sales in excess of $100 billion, according to the Associated Press, and also set a profit record for U.S. companies by posting nearly $10 billion in profits.

Not to be outdone, BP posted $6.5 billion in profits of its own, and Conoco-Phillips netted $3.8 billion in profits.

This is significant to Alaskans for a couple of reasons. Foremost, Gov. Frank Murkowski is trying to close a deal on a North Slope pipeline to bring the state's natural gas to market.

Exxon Mobil, BP and Conoco-Phillips are the three companies that comprise the industry consortium seeking not only to build the pipeline, but also financial concessions from the state to do so. The combined third-quarter profits of the three oil giants - about $20.2 billion - also happens to be about the projected cost of building the gas pipeline.

The oil industry has been responsible for a lot of progress in Alaska. Wealth generated by the industry has bolstered the state's infrastructural foundation, and it brings annual enrichment to all Alaskans in the form of a permanent fund dividend check, which in turn fuels the state's economic engine. Without a doubt, the daily lives of Alaskans are enhanced by the presence of the oil industry.

But that does not imply indebtedness, because the relationship has been mutually beneficial.

In addition to the routine tax breaks and subsidies the industry has received from the state and federal governments over the years, Alaska is the lowest-taxing major oil producer in the world. Around the world, oil companies are accustomed to forking over an average of 80 percent of their profits in the form of royalties to the host government. Here, the number is closer to 40 percent.

Additionally, the industry tax structure here is such that as the price of oil increases, industry keeps a larger slice of the profit pie.

We are not opposed to profits. As a business, we understand the need to keep the bottom line in order. But continuing to pad the bottom line of the oil industry with public money while it is raking in record profits is as frivolous and unnecessary as giving food stamps to wealthy families.

We stand with the majority of Alaskans in favoring a pipeline. And we agree with the governor that it is in the best interest of Alaskans. But not at any cost.

The quarterly reports issued by oil companies on Thursday should close the debate on concessions by the state. We encourage Gov. Murkowski, as he tries to make the pipeline a reality, to put the state's bottom line first.