New oil tax would really hurt

If you haven’t sent your ballot in yet, please do not vote for Ballot Measure One. The measure could be a serious blow to Alaska’s future economy.

It probably wouldn’t affect investment decisions already made. Those would have factored in some foolish public decisions and presumably still be viable. But it will be a serious drag on the economics of future projects — and many of them would never come to fruition because of the vote.

Alaska has a lot at stake in this election and jacking up taxes on the oil industry right now could foreclose some of the more attractive and important options.

Defenders of Measure One say it would only raise taxes on three older fields on the North Slope. The problem there is that those three fields also happen to be the largest yet discovered and developed. It would be considered an example of bad decisions yet to come.

And some claim it won’t impact decisions on other fields. That’s like having your doctor tell you that removing one of your eyes won’t affect the other one. Yeah, right.

ConocoPhillips, the oil industry leader in Alaska these days, recently announced that Ballot Measure One taxes could impact its decision on moving ahead with developing the Willow prospect in National Petroleum Reserve-Alaska.

Willow is expected to increase throughput in the trans-Alaska pipeline by 160,000 barrels a day and could increase total throughput by 600 million barrels over 30 years.

Willow is fairly near an important wildlife area and ConocoPhillips won approval from the federal Bureau of Land Management to proceed with its plans. The area involved is near the Teshekpuk Lake Special Area, which has important caribou and waterfowl populations. ConocoPhillips has an excellent record for operating in critical wildlife habitat and often sets the pace for other companies that come after them.

The construction phase of Willow would generate approximately 1,000 jobs and result in about 400 high-paying jobs over its many years of operation.

In addition to Willow, Alaska also has a major stake in development of another large prospect in the area, Pikka, which is primarily leased by the company named Oil Search. Both prospects lie west of Prudhoe Bay, the huge oil field that started the North Slope boom with its discovery in 1968.

The biggest problem with Ballot Measure One is the message it would send to industry that Alaskans can be counted on to sabotage investments once they are made by changing the game. That has happened numerous times over the years and has often demonstrated that foolish government decisions can have painful long-range economic consequences.

Alaska is well beyond its boom years when North Slope oil prospects were so great that the major oil companies couldn’t afford to stay away. Doing so would have undermined confidence in their management team decisions and resulted in shareholder revolts.

But this state still has a lot of oil, enough to generate jobs and revenues for many years, enough to provide lasting support for an economy in which our children and grandchildren can find good-paying jobs and challenging careers.

In many respects, our future is at stake in Tuesday’s election. ConocoPhillips and other companies are unlikely to cut and run because of one stupid tax decision.

But a bad decision this week could weaken our economic prospects for years go come.

Tom Brennan is an Anchorage columnist and author of six books. He was a reporter/columnist for The Anchorage Times and an editor and columnist at The Voice of The Times.