Oil and Gas Taxes and Spending Continue to Ignite Controversy: Rep. Doogan Says, "Something Has To Be Done" - Canada's Prentice says, "We're trying...."

 

Today's News Observation: "Some politicians are busy trying to find detours around energy roadblocks government has created.  Other politicians are still busy creating energy roadblocks."      -dh
 
Calgary Herald by David Akin and Jason Fekete.  ... "We're trying to ensure major resource projects are not unnecessarily slowed down by duplicative procedures," said Environment Minister Jim Prentice (NGP Photo), regional minister for southern Alberta.  There's potentially $85 billion worth of oil and gas projects to be built in northern Canada over the next decade, including the Mackenzie Valley and Alaska pipelines, said the Canadian Energy Pipeline Association. But burdensome regulatory approvals are deterring investment and actually hurting the environment because the delays force companies to fit construction into a shorter time frame than hoped, CEPA said.  (See Follow-up story here.)

Alaska Dispatch by Rena Delbridge.  If gas had flowed through a huge pipeline from the North Slope during the past two years, Alaska's linked oil and gas tax would have drawn about $2 billion less in tax revenue than if oil and gas were taxed separately.  That's according to an analysis done by consultant David Wood in response to an inquiry by Senate Finance Committee member Sen. Joe Thomas, D-Fairbanks.  Thomas is among a group of lawmakers led by Senate Finance co-chair Sen. Bert Stedman (NGP Photo), R-Sitka, arguing that the state must break gas out from the oil tax before May 1. That's when an open season on a large-diameter natural gas pipeline could lock the tax rate in for the first 10 years of flow. The lawmakers are concerned that without such action, Alaska's treasury could take a hit as big as the one in Wood's scenario -- or bigger. The way gas and oil production are linked for tax purposes means that, under certain scenarios, producers may pay no tax on gas, and even get a break on oil taxes if they're producing gas too....Governor Sean Parnell told reporters late last week that changes to the gas tax at this stage of the game could hurt pipeline progress under the Alaska Gasline Inducement Act.  (Comment: If there is an advantage in this tax structure to producers bear in mind that it could very well be the only incentive remaining available to them for pursuing politically risky Alaska capital investments.  So, changing the tax structure yet again should be done with this question in mind: "What's better, 100% of nothing or a somewhat smaller percent of several billion dollars a year?"  -dh)   

"Something Has To Be Done"

Alaska Dispatch by Rena Delbridge.  As the House Finance Committee prepares to sign off on a $7.4 billion operating budget, lawmakers are expressing sticker shock at almost six percent growth.  They know it's a futile protest, with all but about twopercent of the swell tied directly to federal rules and formulas. But some are deeply concerned about how to check that growth, expected to continue at similar levels annually well into the future.  Rep. Alan Austerman, R-Kodiak, successfully proposed a new Finance subcommittee that will work through the interim on state spending, better ways to budget, and Alaska's economic future. The group has met once so far, but will buckle down soon now that a heavy schedule of subcommittee meetings on agency budgets has been wiped clear. Serious work starts next week with a presentation by Scott Goldsmith (NGP Photo) of the Institute of Social and Economic Research. At 3:30 p.m. March 11, he'll talk about Alaska's economy and how it plays into the state's fiscal future.  "The imperative is that we're ready when we need something else," Austerman said. "It's getting control of what the budget has done." ... As oil production slips and budgets keep growing, concern is bipartisan. Rep. Mike Doogan, D-Anchorage, will participate in the fiscal policy subcommittee.  "We cannot afford to continue to fund the budget that we're going to pass this year," he said. "If oil prices go down substantially, we're in big trouble. Something has got to be done."  House Finance chair Rep. Mike Hawker, R-Anchorage, who supported Austerman's subcommittee proposal, has been involved in similar talks over the years. Alaska's "delicate fiscal regime" is nothing new, he said.

Is the Administration Serious: Increasing Oil and Gas Taxes While Projecting Less OCS Revenue?

U.S. House Committee on Natural Resources.  In the President's budget proposal released yesterday, the Administration is anticipating that revenue from new Outer Continental Shelf (OCS) leasing will decline over the next five years. The only way revenue would decline is if less of the OCS is offered for leasing for energy production.

 ... The leaders of federal agencies that oversee offshore and onshore energy and mineral production on federal lands, including Minerals Management Service, the Bureau of Land Management, the Office of Surface Mining Reclamation and Enforcement, the United States Geological Survey, and the Forest Service, were scheduled to testify.  “Democrats cancelled this hearing literally the night before Administration officials were going to have to answer tough questions on how the President’s budget will increase energy prices and squelch energy job creation in the United States,” said House Natural Resources Committee Ranking Member Doc Hastings.  “This budget includes dangerous proposals that will raise energy prices, stall our economy, block job creation and put millions of existing energy jobs at risk.  The decision to cancel is very disappointing considering that Secretary Salazar isn’t even scheduled to appear before the Natural Resources Committee to explain and defend the President’s budget.  At this time, not a single person from this Administration will have to answer for the destructive energy policy in this budget.”  Republicans were poised to ask tough questions regarding the President’s proposed budget that includes nearly $40 billion in tax and fee increases on American energy, a decrease in revenues from new offshore drilling leases, and an elimination of the profitable royalty in-kind (RIK) program for collecting oil and gas royalties.

The Hill (3/3) reports, “American Solutions, the advocacy group led by former House Speaker Newt Gingrich, on Wednesday slammed the Interior Department over the agency’s plan to wait until 2012 before a new offshore drilling plan takes effect. The group, on its website, said Interior Secretary Ken Salazar “dropped a bomb on American energy independence, economic recovery, and public opinion,” when he previewed his plans this afternoon.

USA Today (3/3) reports, “As states compete to attract clean energy jobs, windy Wyoming is set to become the nation 's first state to tax wind power. Wyoming's Legislature passed a bill late last month that, beginning in 2012, will impose a $1-per-megawatt-hour tax on wind energy. Democratic Gov. Dave Freudenthal, who proposed the tax, is expected to sign the bill as early as this week.

Opposing Views.com. “Members of Congress are working with oil companies now to levy a carbon fee on the transportation sector: “Key senators are weighing a request from Big Oil to levy a carbon fee on the industry rather than wrap it into a sweeping cap-and-trade system that covers most of the U.S. economy. If accepted, the approach — supported by ConocoPhillips, BP America and Exxon Mobil Corp. — could rearrange the politics of the Senate climate debate and potentially open up votes that may not be there otherwise.” Such an approach would do nothing but cause more economic pain for American households. Higher gas prices lower employment, income, and spending, and Americans will have to dip into their savings to pay for higher gas prices. Heritage economist Karen Campbell details these effects in her paper, “How Rising Gas Prices Hurt American Households.”  

(For some links, we thank info@americanenergyalliance.org.)

(And just for fun, Sarah Palin speaks....) 

 

You Betcha

Submitted by SledHead (not verified) on Fri, 03/05/2010 - 08:34.

The roadblocks aren’t just being created in Washington. Juneau is doing a huge job in creating roadblocks of their own. We need government to get out of the way and for it to get smaller and cheaper.