Hilcorp-BP deal is good for Alaska

Hilcorp’s purchase of British Petroleum properties on the North Slope is good news for Alaska. Hillcorp is doing a great job producing and exploring for gas in Cook Inlet, and we look forward to the company’s positive contributions to oil and gas development on the slope.

Backbone, the citizen’s group that advocated on behalf of Alaskans during the past decades, has long held that the entry of smaller independent oil companies would be good for the state. It is they that can be counted on to actively explore for new fields and bring on line new production. So every new company up north is a boon to Alaska.

One thing that the backers of repealing the oil tax giveaway and the “vote no” crowd agree upon is that oil development is good for Alaska. We are well acquainted with, and value, the economic, financial and quality-of-life benefits that industry activity provides to Alaska.

At the same time, we believe that Alaska’s Constitution was not followed when legislators and the governor enacted the Senate Bill 21 giveaway. Section 2 of Article 8 specifies that the state’s natural resources shall be managed for the maximum benefit of the people. That was not done in this case.

SB21 reduced by billions of dollars the taxes that major producers pay to the state for our oil. They obtained this benefit without any commitment or obligation for future investment, exploration or production.

Now, endless media advertising alleging massive new investments and jobs bombard us as a result of SB21. These assertions are not believable because multinational corporations don’t change direction in a matter of months. They review worldwide situations and opportunities, and investments are years in the making.

Most of what’s happening today was initiated during the previous oil tax regime, known as ACES. During that era, oil prices were high, producers made record profits, employment grew, and more new companies conducted exploration.

Meanwhile, Alaska balanced its budget and accumulated $17 billion in savings.

Now, because of SB21 and changes in the international price of oil, the state is looking at greatly reduced oil income, massive annual budget deficits, and multi-billion dollar withdrawals from our savings accounts. There’s even talk in Juneau that the fiscal crisis is putting the Alaska Permanent Fund “on the table.” Certainly, none of that accrues to the benefit of Alaska’s people.

The trouble with SB21 is that it was created by the current Legislature, which requires lockstep obedience and countenances no reasonable compromises. They rejected every amendment to provide for performance measures and accountability, regardless of whether proposed by Democrats or Republicans. A reasonable lawmaking process could easily have dealt with any valid criticism of ACES (such as excessive progressivity with high oil prices), protected constructive exploration incentives, and looked at modifying sensible tax rates when prices drop. That is still needed.

So we urge the people of Alaska to:

1. Vote “Yes” and repeal the SB21 giveaway.

2. Elect leaders who will put Alaska first.

3. And, pursue legislation that will ensure that Alaska’s oil and gas resources are managed for the maximum benefit of the people, while also being fair to oil and gas producers.

Vic Fischer was a delegate to Alaska’s Constitutional Convention, Territorial Representative, and State Senator. He is Director Emeritus of University of Alaska Anchorage’s Institute for Social and Economic Research and authored To Russia with Love: An Alaskan’s Journey.

Jack Roderick is author of the definitive book Crude Dreams, A Personal History of Oil and Politics in Alaska. Jack has served as mayor of Anchorage and was Deputy Commissioner of Alaska’s Department of Natural Resources.