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Note from Rep. Les Gara
Note from Rep. Les Gara  

Oil Tax Rollback: Documents Undermine
“Million Barrels a Day” Promise

Note from Rep. Les Gara

February 7, 2014

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Dear Friends and Neighbors:

When does 370,000 equal 1 million? Only in politics.

Last year, to get the votes to roll back Alaska oil revenue by over $12 billion in the next decade, the Governor told voters they could expect a 100% increase in production by 2023 to “1 million barrels” of oil a day. Nice sound bite. Not accurate.

The state’s own documents show oil production will fall faster under the Governor’s new law than the one we replaced, with a loss of revenue that will harm our schools, construction jobs, and ability to run this state. My view is we should vote to reverse this law in August, when that question is on the ballot. It is proving to be a pathway to poverty for this state.

Those documents, and our press release, follow.

My best as always,

[signed] Les Gara

P.S. – Let us know if we can help, or if you have thoughts to share.

February 7, 2014

Parnell Administration: Gov’s 1 Million Barrel Goal Not Going to Happen

Gara, French call on governor to concede decreased production

Today, Representative Les Gara (D-Anchorage) and Senator Hollis French (D-Anchorage) called on the governor to concede his massive oil tax rollback (SB21) will continue a steeper decline in oil production than the law it replaced.

“We know the state is giving away billions in Alaska revenue under Governor Parnell’s oil giveaway,” said Gara.  “The debate on the referendum has to be on facts, not wishes.”

During the debate on last year’s oil revenue rollback, Governor Parnell repeatedly set the goal of “one million barrels of oil production per day through the Trans Alaska Oil Pipeline System (TAPS) within 10 years” and claimed his tax rollback was the way to get there. At a House Finance Committee meeting on January 28, 2014, Alaska Department of Revenue officials conceded to questions asked by Gara that the department now predicts less production in eight years than before passage of the tax rollback.

According to the Alaska Department of Revenue, Governor Parnell’s oil wealth giveaway (SB21, 2013) will fall far short of the governor’s goal of North Slope production reaching one million barrels per day. In fact, in the department’s first production forecast after passage of SB21, the department actually predicts less oil production eight years from now than it did under the prior oil tax system.

“The Governor led people to believe that giving away billions in Alaska’s oil revenue to Exxon, BP, and Conoco, with no guarantee they’d spend that money in Alaska, would lead to a massive increase in oil production.  We knew then it wasn’t true, and now the state admits it wasn’t true,” said Gara.  “The Governor is cutting school funding for a fourth year in a row, jeopardizing construction jobs, and harming the economy. His bill is a pathway to poverty.”

Democrats proposed reforms that would have offered tax incentives to companies which increased production and for research to bring our billions of barrels of stranded heavy oil into the pipeline. That bill did not give billions of across-the-board tax breaks to Exxon, BP, and ConocoPhillips as did SB21. 

In the Department of Revenue’s Fall 2013 Revenue Sources Book, calculated under the governor’s 2013 oil law, the state predicts daily oil production of far less than the governor’s goal of a million barrels per day.  They project oil production will fall by 33% from 2014 to 2022, from 508,000 barrels per day to 340,000 barrels per day. 

How does that compare to their estimates under the previous tax system?  The Department’s Spring 2013 Revenue Forecast, calculated under the prior oil tax, predicts a smaller decline to 344,500 barrels per day in 2022.  See Table A-7, page 26, of the Spring 2013 Revenue Forecast. At projected oil prices, the 4500 barrel per day difference is worth nearly a half a million dollars per day in gross revenue.

“We should adopt an oil tax that actually gets more oil production.  That’s the purpose of the August voter referendum to get rid of this costly experiment, which the Department predicts will cost Alaskans $12 billion in lost oil revenue between 2014 and 2022,” said French, referring to the Spring 2013 ACES and Fall 2013 SB21 revenue forecasts. 

If the embedded links above do not work, you can find the cited documents at the following URLs:


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