‘Yes’ on Ballot Measure 1 saves jobs

A “yes” vote on Ballot Measure No. 1 will repeal Senate Bill 21 and provide Alaskans with a greater share of their resource wealth from the production of oil. There has been a great deal of misinformation regarding Ballot Measure No. 1.

The first piece of misinformation is that SB 21 will have roughly the same revenue impact as the prior system called ACES. Even the SB 21 supporters’ analysis demonstrates SB 21 would have resulted in between $1 billion and $2 billion per year in less revenue for 2011-2013. Revenue differences based on actual historic information are far more reliable than revenue differences based on future forecasted information by SB 21 supporters. If further evidence is necessary, one need only consider the tens of millions of dollars the three major oil companies have spent trying to pass and keep SB 21.

The second piece of misinformation is that SB 21 will create jobs in Alaska. SB 21 will take money from Alaskans and give it to the three major oil companies for harvesting our existing fields. The money Alaskans are giving up would otherwise have been spent in Alaska for police, fire protection, schools, government services, and needed capital projects. SB 21 will also take money from the independent oil companies exploring for new oil. The money independents are giving up would otherwise have been spent exploring for new oil which will create far more jobs than will the three major oil companies harvesting existing fields. The lion’s share of the money the three major oil companies are getting under SB 21 will be “windfall profits” sent out of Alaska for shareholders and projects in other parts of the world. Taking money from Alaskans and independents exploring for oil and giving it to the three major oil companies to send out of Alaska will result in fewer jobs for Alaskans, not more.

Consider also how many jobs would have to be created to equal the $1 billion to $2 billion per year we are giving up through SB 21. A billion dollars is equal to 10,000 new jobs paying $100,000 per year. Rather than getting 10,000 to 20,000 new jobs, I have heard at least one of the three major oil companies has already decided to cut jobs in Alaska, but is waiting until after the vote on Ballot Measure No. 1 to announce those cuts. Under ACES, an oil company benefits by creating more jobs and spending more money in Alaska; under SB 21 an oil company benefits by cutting jobs and spending less money in Alaska.

The third piece of misinformation is that SB 21 has or will “reduce the decline” in production. The major oil fields in Alaska have hyperbolic production demand curves. This means the production decline is more rapid earlier and slower later. Recently, SB 21 supporters have claimed this natural stabilization of production is due to SB 21. That is not even a serious claim for anyone who knows how many years it takes for the three major oil companies to plan and execute oil projects. Any stabilization of oil production occurring today is the result of the inherit characteristics of the major fields, or ACES, and not SB 21.

Alaskans deserve to get a better deal, more jobs, and more revenues into our permanent fund than SB 21 provides. A “yes” vote will pave the way to more balanced legislation that rewards oil companies for exploring for new oil and adding jobs in Alaska while also getting a fair share for our future from the three major oil companies making “windfall profits” harvesting our existing fields.

Robin O. Brena is an attorney from Skagway and practicing in Anchorage who has been involved in major oil and gas matters and litigation for 30 years.