Palin Promotions

Reporter Jim Malewitz of the Seattle Times yesterday provided a fair and balanced summation of the history that led up to the passage of SB-21 and much of the controversy surrounding it. US for Palin naturally is against SB-21 because it contravenes Alaska’s Clear and Equitable Share (ACES) as passed by the state’s former governor Sarah Palin and was one of her core accomplishments.

According to US Department of Energy statistics, Alaska ranks fourth in oil production behind Texas, North Dakota, and California in that order. As we’ve chronicled in our coverage of Alaska Governor Sean Parnell’s three-year-long war on ACES, Alaskan oil is located in some of the most remote and inhospitable terrain on the planet, combined with very short seasons in which exploration can be conducted. It can take up to seven or eight years to drill a well in Alaska versus nine months in Texas. Further, production is on the decline in existing fields, because they are being depleted.

Under SB-21, oil companies will be taxed at a flat 35% on their profits. There will be no capital expenditure tax credit to provide incentive for new exploration. The cap-ex credit was one prong of ACES, and energy companies did use it, particularly the smaller ones. Under ACES, the tax on oil profits was progressive ranging from 25% when oil prices were low to over 50% when prices were high.

Malewitz covered both sides of the issue: Gov. Parnell who pushed SB-21 under the belief that will encourage investment, competition, and production and those who support ACES, seeing SB-21 as a giveaway and a gamble. Alaska developed a $16 billion surplus under ACES. Under the Alaskan State Constitution, the people of the state own the mineral resources. He discussed the revenue shortfall that will result and how it could harm the state. Malewitz also referenced the conflicts of interest among the legislators that presided over the passage of SB-21.

“But a host of critics fear the worst. They call the tax plan an overt gift to Alaska’s ‘Big Three’ oil producers — Exxon Mobil, ConocoPhillips and BP. Those companies have an outsize influence on a citizen Legislature that includes two senators who moonlight for ConocoPhillips (the Senate bill passed 11-9, with both of them voting yes),” Malewitz wrote.

One critical item not discussed in our prior coverage, but reported by Malewitz is the possible closure of the Trans-Alaska pipeline. If too little oil traverses it, the pipeline could freeze, causing it to be shut down. He cited a US Energy Information Agency report which said this scenario could unfold as early as 2026.

Though Alaska is a difficult market to break into, it is extremely lucrative once there. Alaskan crude sells for $25 per barrel more than North Dakotan oil, Malewitz reported.

Two groups: Vote Yes! Repeal the Giveaway -which Malewitz covered – and AKBackbone are fighting SB-21. US for Palin covered both Stop the Giveaway‘s referendum effort and AKBackbone’s protests in prior reports.

H/T Lynda Armstrong, “The Teacher’s Daughter: a Tribute to Sarah Palin” Facebook Group for story lead.

The organizers and sponsors of Vote Yes! Repeal the Giveaway gathered Thursday to submit their proposed referendum to Alaska Lt. Governor Mead Treadwell to verify the language, so it will be valid for signature gathering, Alex DeMarban, Alaska Dispatch reported. The organizers have 372 sponsors, which is more than three times the amount required, however, they must gather over 30,000 signatures in less than three months for the referendum to be put on the ballot on August 26, 2014. The number represents 10% of the electorate who voted in the last election.

The referendum’s principal sponsors are: “Jim Whitaker, a Republican and former Fairbanks mayor, Bella Hammond, widow of late Republican governor Jay Hammond, and Vic Fischer, a former Democratic senator.” Fischer helped draft the Alaska State Constitution over 50 years ago, and said SB-21 violates the state Constitution.

“In the ’50s, Alaskans worked to get statehood to get away from absentee control of Alaska resources,” said Fischer, referring to outside industries that dominated development.

The Constitution says the state should manage its resources for the maximum benefit of its residents. But Senate Bill 21 doesn’t do that, Fischer said, calling it an “unconstitutional” giveaway of billions of dollars benefiting BP, Exxon Mobil and ConocoPhillips, the companies that produce nearly all of Alaska’s oil.

The Bob and Mark Show referred to DeMarban’s report during their Friday morning broadcast. Bob Lester and Mark Colavecchio who host the show have been friends of the Palins for over 17 years and have been at the forefront of repelling Alaska Governor Sean Parnells’s three-years-long war on Alaska’s Clear and Equitable Share (ACES), in which he finally emerged victorious.

Meanwhile, DeMarban reported on April 19, that ConocoPhillips cancelled a contract for an oil rig under construction in the Arctic Sea off the North Slope. Drilling was to have begun in the summer of 2014.

“While state leaders put a buoyant spin on Alaska’s future, skeptical observers can’t ignore the facts as oil production on the North Slope continues its two-decade drop…[S]ome skeptics can’t help but wonder how long before the state’s $16 billion savings account vanishes, what with Gov. Sean Parnell’s “great gamble” to lower oil production taxes in hopes the oil patch grows,” DeMarban wrote.

DeMarban cited Shell’s “pausing” of Arctic drilling to focus on repairing rigs in Asia, the stalled 800-mile pipeline which was likely just a ploy to get tax breaks, and the price of crude dropping to below $100 per barrel as the Chinese economy slows.

On April 16, the Juneau Empire published Gov. Parnell’s spiel on SB-21.

H/T Lynda Armstrong, “The Teacher’s Daughter: a Tribute to Sarah Palin” Facebook Group for story lead.

The bill to give away tax revenue to the Big Three Oil Companies – SB-21 – passed both houses and is headed for Alaska Governor Sean Parnell’s signature, giving him the victory he sought in his three-year-long war against Alaska’s Clear And Equitable Share (ACES), Pat Forgey, Alaska Dispatch reported on April 15. Meanwhile, a group of moderates (“politics doth make strange bedfellows”) is seeking gain 31,000 signatures in three months representing the minimum 10% of the electorate required to place a referendum on the ballot overturning SB-21. The group’s proposal is not a reinstatement of ACES, but rather a variant they dub “77-7.” The 77-7 plan would reinstate the ACES production taxes, but give larger capital expenditure tax breaks for new explorations and discoveries.

Vague Metrics for Success, Failure of SB-21 Giveaway

When questioned about how he would measure the success or failure of SB-21, Gov. Parnell could only offer two vague metrics, “opportunity created for our kids and our grandkids,” and “new production coming on line.” Who knows what constitutes “opportunity for our kids and grandkids”? Gov. Parnell himself probably does not even know. “New production coming online” is a contradictory statement. Existing fields are naturally in decline, because at some point the oil within them will be depleted. The point of ACES was to encourage new exploration and investment in the state via capital expenditure tax breaks, then levy taxes on production. With the capital expenditure breaks gone, what is the point in making these investments? The Big Three oil companies were given a huge gift without so much as a promise of increased production.

Bye, Bye Savings, Hello Debt, Insolvency

Under ACES, the Big Three earned $2.3 billion in profits from Alaska operations alone, Alex DeMarban reported in referendum story. Now, with the SB-21 give-away, the state will lose $3.5 to $6 billion over the next six years. Alaska will have to make up the shortfall by drawing down on the state savings and surplus created by Gov. Palin. When the state falls into the deficit abyss, it may be forced to target the Permanent Fund Dividend next to stop the bleeding. Political organizer Ray Metcalfe gave the dire prediction of the state going bankrupt and many small energy-related businesses also headed to bankruptcy.

It should be noted that Metcalfe is a Republican, turned Democrat, so he is likely no supporter of Gov. Palin or her Reagan Conservative principles. His talk of the state ending up bankrupt could be hyperbole, but it could also happen in the distant future under SB-21. Certainly, the lack of tax credits for small companies could drive them to bankruptcy court. It is rather ironic that many of Gov. Palin’s worst enemies – such as Hollis French and Johnny Ellis, as well as the cacophony of commenters in the Anchorage Daily News are standing up for ACES, while some alleged “friends” supported SB-21. Again, this is a classic case of “politics doth make strange bedfellows.”

History to Vindicate Gov. Palin

The bottom line is, Gov. Palin’s ACES brought about a massive state surplus and improved its credit rating. Even her old enemies such as French said, “suddenly you will see the administration talking about the explosion of activity that’s been happening under our very noses (under ACES), and they have not been publicizing because it does not fit into their themes of decay and decline.” Forgey reported, many “new projects, such as new wells or production facilities, are underway with the current tax system (meaning ACES).”

Perhaps, Alaska needs to slide into the debt abyss to appreciate what it had under Gov. Palin’s tutelage. Though Gov. Parnell and his henchmen and women got their victory, history will look fondly on Gov. Palin. She will be vindicated long after her enemies are irrelevant and forgotten, like she has so many times in the past. Many of these people have also gone on to learn about a different woman. Her name is “Payback.” I suspect Gov. Parnell and those behind SB-21 will soon meet “Payback,” and they will learn exactly what kind of woman she is.

H/T Lynda Armstrong, “The Teacher’s Daughter: a Tribute to Sarah Palin” Facebook Group for story lead.

The last few days have been busy at the Alaska Statehouse. While we have been focusing much on SB-21 – the bill that is intended to abolish Alaska’s Clear and Equitable Share (ACES), not all the news coming out of the legislature is bad.

Federal Gun Control Nullification

The Tenth Amendment Center reported two days ago that both the AK House and Senate approved HB69, which would nullify any federal gun control laws passed by the Obama administration. Wyoming, Texas, and several other other states have passed or are working on similar legislation. Alaska Governor Sean Parnell will more than likely sign it.

Among other things, SB69 says:

“a statute, regulation, rule, or order that has the purpose, intent, or effect of confiscating any firearm, banning any firearm, limiting the size of a magazine for any firearm, imposing any limit on the ammunition that may be purchased for any firearm, or requiring the registration of any firearm or its ammunition infringes on an Alaskan’s right to bear arms in violation of the Second Amendment to the Constitution of the United States and, therefore, is not made in accordance with the Constitution of the United States, is not authorized by the Constitution of the United States, is not the supreme law of the land, and, consequently, is invalid in this state and shall be considered null and void and of no effect in this state…”

The legislation requires the state to stand down and not enforce unconstitutional federal gun control laws. It also requires the state’s Attorney General to defend any Alaskan who is charged under any such “laws” that may be passed. The entire premise of this legislation is that the gun laws being proposed are not valid laws.

Alaskans are urged to call Gov. Parnell at (907) 465-3500 and ask for him to sign SB69 into law.

H/T O.P. Ditch, Vets4Sarah for story lead.

HB 4, which will provide $400 million to build an in-state gasline has been approved, Pat Forgey of the Alaska Dispatch reported yesterday. Judging by the headline, Forgey believes this pipeline will be little more than a pipe dream. Hopefully, the pipeline will materialize and become reality – otherwise it would be a nearly half-billion dollar boondoggle. As previously reported, a new state agency would be created to oversee construction of the pipeline which would bring North Slope natural gas to the state’s population centers. It could possibly connect to the larger pipeline being built under the Alaska Gasline Inducement Act (AGIA), one of former Alaska Governor Sarah Palin’s core accomplishments.

“Alaska’s constitution contains an explicit provision which requires that Alaska’s resources are for the maximum benefit of Alaskans, not corporate interests no matter how powerful. The Alaska Constitution is threatened by SB21’s resource giveaway. It must be recognized that the corporate goals of Big Oil are not the same as Alaska’s,” Joe Paskavan wrote for the Alaska Dispatch on April 10.

Paskavan wrote that the state Constitutional Constitution had two fears: that Big Oil would exploit the resource under the “thin guise of development,” or acquire oil rich lands and warehouse the resource to prevent competition with activities in other locations – specifically foreign countries. “It is a myth and manufactured crisis that oil throughput decline is caused by Alaska’s production tax,” he wrote saying that the decline is due to both treatment facility constraints and “limitations on capacity to get oil out of the facilities, which were designed, engineered and intended by Big Oil decades ago.”

Oil decline started in 1989, long before Gov. Palin entered politics and long before ACES, as previously reported. The big three companies had a near monopoly less than a decade ago. Under ACES, small independent companies are thriving. SB-21 could return the Big Three to near monopoly status again.

“Alaska’s constitution should not be trampled and our resources should not be exploited. The economic goals of corporate interests, especially those with near monopoly powers and a history of corruption of the public process, are not similar to Alaska’s goals. The SB21 tax giveaway with:

1. no benchmarks to legitimately measure real increased production,
2. no sunset to provide Alaskans with an opportunity for realistic reassessment, and
3. no established reinstatement of the current tax structure when the giveaway tax bill fails…

…is a trampling of Alaska’s constitution and an exploitation of our resources,” Paskavan concluded.

Alaskans are encouraged to keep up the fight against SB-21.

H/T Lynda Armstrong, “The Teacher’s Daughter: a Tribute to Sarah Palin” Facebook Group for story lead.

Alaska’s Clear and Equitable Share “(ACES) was intended to ensure Alaska got a fair value for oil pumped from its lands, while at the same time encouraging more investment in the oil fields,” Pat Forgey, Alaska Dispatch reported yesterday in Fact check: What was the purpose of ACES oil tax?.

In a truly bizarre case of “politics doth make strange bedfellows” Alaska State Senator Hollis French D-Anchorage – one of former Alaska Governor Sarah Palin’s most bitter enemies once Obama became the Democratic Party’s nominee in 2008 – was and remains a staunch defender of ACES. French launched his unsuccessful assault on Gov. Palin’s career as one of the principals in the “Troopergate” – or more rather “Tasergate” investigation – at the height of the McCain-Palin 2008 campaign. French is a hard leftist and strong circumstantial evidence suggests the Obama campaign was behind the investigation. French, therefore is neither a friend of Gov. Palin’s nor of conservative principles, but ironically, he is one of the few in the stacked legislature who are standing up for ACES.

Under ACES, which was passed with solid bi-partisan support, the tax levied on production profits increases as oil prices increase, but oil companies are given tax credits for exploring and and drilling new fields. Smaller companies have been more aggressive about exploration, thus have benefited from the capital expenditures breaks offered under ACES. The tax system came under attack as the ink was drying on Gov. Palin’s signature and her successor – Alaska Governor Sean Parnell – who first promised to uphold it, has waged a three-year-long war against it.

Though oil production has declined, employment on the North Slope has increased steadily since the passage of ACES. Forgey reported on the whole back-and-forth among those who claim that ACES is responsible for the decline in production on the Slope. But, “The companies that operate on North Slope say the aging oil reserves have been undergoing “normal field decline,” most of which happened before ACES was adopted in 2007,” Forgey reported. Production has been declining steadily since the 1980s, long before ACES. Gov. Palin was a college student at the time production began to wane.

ACES was not designed to raise taxes, punish companies, or increase production. Forgey reported on a controversy involving Gaffney, Cline & Associates, an oil industry consultant the state retained when crafting ACES. Proponents of SB-21 – the bill that would abolish ACES – say the firm claimed ACES would increase production, but no evidence exists to support the claim. The Parnell administration has the firm under contract, but not for matters related to oil profits taxation. Forgey reported that the Parnell administration refused to respond to requests from State Sen. Gara filed under Alaska’s public records law for the firm’s economic models and reports. Further, the administration will not make a decision on releasing the data until after the legislative session concludes. These moves suggest the Parnell administration knows the firm never made promises that ACES would increase production – which was not the point of the tax system in the first place.

The Alaska Legislative Session concludes April 18. Alaskans should urge the representatives to vote NO on ACES. The group, AKBackbone has been organizing protests and taking other political action to preserve ACES.

H/T Lynda Armstrong, “I Stand With Sarah: a Tribute” Facebook Group for story lead.

Alaska Senate Bill 21 has been re-written to reduce the oil tax base rate from 35% to 33%, the Alaska Dispatch reported on April 4. The changes could cost the state an additional $1 billion over the next six years, according to the State’s Department of Revenue, in Pat Forgey’s report filed on April 6. The bill is estimated to cost the state between $5.7 billion and $6 billion over the next six years. Ordinary Alaskans have been protesting SB-21 as well.

One of the bill’s chief proponents “House Resources Committee Co-chair Eric Feige, R-Chickaloon, said that if Alaska took $1 billion less in taxes from oil companies, that money would all be reinvested in Alaska,” Forgey reported.

But, “the tax cut is to oil companies’ profits, they’ll have to pay income tax on that money. The federal corporate income tax rate is 35 percent, though companies had varying effective tax rates. Therefore, a billion dollar tax cut would leave companies with only $650 million available to be invested in Alaska, in theory, if they choose to do so.”

The entire point of Alaska’s Clear and Equitable Share (ACES) – one of Gov. Palin’s three core accomplishments while in office – is to give oil companies the opportunity to buy down their tax burden by reinvesting in Alaska.

Meanwhile, Forgey reported on April 6 that the House in the dark of night passed an Amendment to SB-21 that requires state auditors checking companies’ tax returns to use oil industry figures and not their own. “The amendment was proposed by Rep. Mike Hawker, R-Anchorage. His wife is a business and financial analyst for ConocoPhillips, the state’s largest oil producer. According to Hawker’s financial disclosure filings, she earned between $100,000 and $200,000 from her ConocoPhillips job last year,” Forgey reported.

The language of this amendment was in the Petroleum Profits Tax (PPT) of 2006. Out of the PPT was born the Corrupt Bastards Club (CBC) and the VECO scandal. It appears Alaska Governor Sean Parnell along with his henchmen and women in both houses are gearing up to launch CBC 2.0.

Another Dispatch article filed on April 4 by Laurel Andrews delineated in detail how Alaska’s laws foster conflicts of interest in the legislature. Legislators cannot simply recuse themselves from a vote. The Uniform Rules require unanimous consent from the requestor’s colleagues, however, a legislator is free to abstain from voting altogether absent a request to recuse.

Alaskans Awake and Protesting

Alaskans are awake to what is going on with SB-21 and have protest in at least two cities. Some have organized under the banner of “AKBackbone,” which is comprised of Republicans, Democrats, and Independents.

You can follow AKBackbone on Facebook and Twitter.

AK Backbone has been conducting rallies and protests throughout the state and the Dispatch provided photos from Anchorage, all courtesy of Clark James Mishner.

These photos in which protesters burn a symbolic $5.5 billion check in Homer are courtesy of Bob Shavelson.

H/T Lynda Armstrong, “I Stand With Sarah: a Tribute” Facebook Group for story leads.