Representative Geran Tarr

FEBRUARY 24, 2017

Anchorage Caucus & Work on
Oil and Gas Subsidy Reform

Dear Friends and Neighbors,

First, I hope to see many of you tomorrow morning at our Anchorage Caucus meeting being held from 10-12 at the Anchorage LIO, located at 1500 W. Benson Ave. 

As Co-Chair of the House Resources Committee I have been spending a lot of my time on our reform measure, House Bill 111.  House Bill 111 attempts to reduce the downside risk for the state, meaning to prevent the state from being overcommitted through credits to pay amounts that are not affordable during low prices of oil.  93% of respondents to our budget survey said this was a priority.  

When SB 21 was developed, I was a member of the House Resources Committee.  The oil prices considered were $60-$120, not the below $60 prices we’ve seen since December of 2014.  If you look at prices, when SB 21 was written the price was about $94.00.  Oil prices remained high throughout 2013, but by October of 2014 they were falling quickly.  By December of 2014 prices were below $60 and they have not raised above $60 since then.  Throughout 2015 and 2016 oil prices continued to drop to the recent low in February 2016 of $27.45.

I strongly believe if we had modeled SB 21 at prices below $60 we would have a different system in place today, at least at prices below $60.  The system is too generous to be affordable at low prices.  What we are hoping to accomplish is to make some changes that make the system durable at all prices and all time horizons. 

There’s no denying the importance of the oil and gas industry in terms of revenue to the state and the jobs provided.  However, we have to balance our investments in oil and gas development against our other constitutionally obligated needs, including public safety and education.

The videos of our meetings can be found online and I’d encourage you to watch them to learn more.  We began this session with a Status Update on our oil and gas tax system.  The week included presentations from Ken Alper, Tax Division Director with the Department of Revenue, two meetingswith invited testimony from industry leaders, and a presentation from Anchorage oil and gas attorney Robin Brena.  Mr. Brena provided great insight into understanding taxes and company behavior from his work as an attorney.  I appreciated what he could share having seen privileged tax information that I do not have access to as a legislator.  Overall, lack of transparency is a real challenge to our current system because we do not have access to information that would more definitively tell us whether the subsidies we have offered are working.  I consider this one of the most important parts of our reform because as policy makers the lack of information means we are forced to make somewhat uninformed decisions. 

Following the introduction of House Bill 111, we have held additional hearings with Department of Revenuemodeling from the Department of Revenue regarding development over the life of an oil field, a hearing with our legislative consultant Rich Ruggiero, and invited testimony from industry.  I hope you’ll have time to watch some of these meetings too. 

Work will continue next week with more hearings, a work session with Mr. Ruggiero, and public testimony.  You can watch the live hearings using this link.  Public testimony will be Wednesday evening to accommodate more working Alaskans.  You can testify from the Anchorage LIO or if you are unable to make it to the LIO please contact my office and we will help you with an alternative option. 

Again, hope to see you tomorrow at the Anchorage Caucus meeting!


signed: Geran Tarr
Representative Geran Tarr

PS. Two more things:

1.       DATE CHANGE!  The constituent meeting is now March 25th, from 2-4 pm at Clark Middle School. 


State Capitol Bldg. Room 126
Juneau, AK 99801
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Anchorage, AK 99503
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Celeste Novak, Legislative Aide
+1 (907) 465-3424

Thatcher Brouwer, Legislative Aide
+1 (907) 465-3424

Magdalena Oliveros, Legislative Aide
+1 (907) 465-3424


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Senator Dan Sullivan
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T (202) 224-3004
EMAIL: Sen. Dan Sullivan

Senator Lisa Murkowski
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Anchorage, AK 99501
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EMAIL: Sen. Lisa Murkowski

Congressman Don Young
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Anchorage, AK 99503
T (907) 271-5978 F (907) 271-5950
EMAIL: Rep. Don Young