It’s not surprising that some in Alaska are once again discussing oil tax policy. Talking oil taxes is almost a state sport, with the tax system changing seven times in just the last 14 years. Given the tough budget conversation underway in our state, it’s not surprising that some people are once again trying to put oil taxes in the spotlight.<\/p>\n
Before we get too far down the road, however, let’s take a look at how we got here.<\/p>\n
About a decade ago, alarms were sounding about continued decline in the Trans-Alaska Pipeline’s throughput, the amount of oil it moves to market. Alaskans were right to be concerned, as oil was, and still is, the state’s largest tax and royalty payer. Policy makers and citizens alike rallied around changing the tax structure to encourage more oil production, and even upheld the new tax law in a statewide vote.<\/p>\n
[Opinion: Eliminate Alaska’s oil tax credits]<\/a><\/ins><\/p>\n This decision turned out to be the right move — the new tax policy stopped the dramatic decline rates. During the period of the old “ACES” tax regime (calendar years 2008-2013), oil production declined by 169,000 barrels per day, or 6 to 8 percent a year. This accelerated decline scared everyone. Fortunately, since the new law took effect in 2014, oil production has stabilized, holding steady in years of low oil prices. <\/p>\n Even more telling, in the fall of 2012, the state forecasted that North Slope production in Fiscal Year 2018 would average 443,000 barrels per day. Thanks to that significant investment focused on more production, the North Slope actually produced 518,000 barrels per day for FY18, an increase of 75,000 barrels per day over what had been predicted. More production means more revenue for the Permanent Fund and key essential services — a win for all of us.<\/p>\n