Rocky Elerding Key Topics for Today 1. The importance of oil in - - PowerPoint PPT Presentation

Rocky Elerding

Key Topics for Today

• 1. The importance of oil in Alaska’s economy
• 2. Oil tax reform fixed a failed system
• 3. New oil tax reform is already working
• 4. Ballot Measure 1 impacts our future

Importance of Oil to Alaska

• Jobs, jobs, jobs
• Significant revenue to state of Alaska
• Economic growth & future prosperity

“Alaska is uniquely dependent on oil”

• CBS News, 12/27/13

Importance of Oil to Alaska

“…without oil, [Alaska’s] economy today would be only ½ the size.”

University of Alaska Anchorage, ISER report,

• Prof. Scot Goldsmith, February 2011

Jobs for Alaskans

One-third of all Alaska’s jobs (approximately 110,00 jobs) are attributed to the oil and gas industry.

Source: University of Alaska Anchorage, Prof. Scott Goldsmith, December 2008

Jobs for Alaskans

One oil/gas industry job creates 9 other jobs in Alaska.

McDowell Group Economic Impact Report, October 2011

REVENUES: Alaska Depends on Oil

REVENUES: Alaska Depends on Oil

Oil revenues also led to the creation of the Alaska Permanent Fund:

• 25% of oil royalties go to the Permanent Fund
• Permanent Fund Dividend created in 1982
• Since 1982, $35,143 per person in PFD

payments

• No state income or sales taxes

What is the Problem?

Oil Production Decline

What is the Problem?

Oil Production Decline

What is the Problem?

ONLY Alaska Production Declined in 2012

What is the Problem?

Alaska Fell to 4th in Oil Production

What is the Problem?

Oil Companies Invested Outside of Alaska

WC ANS Crude

Econ One Research

Estimated Capital Spending for Exploration and Development: Alaska North Slope vs. U.S. and Worldwide Spending

US Production is Booming

But NOT in Alaska

• CBS News, 12/27/13

“Alaska, one of the country’s top oil suppliers, is being left in the dust.”

What Caused the Problem?

• Old tax structure passed in 2007
• Most complicated oil tax laws in the country
• One of the highest tax rates in North America
• Did not increase production
• Chilled investment climate

The Old Tax Structure

THE SOLUTION: Oil Tax Reform

• Both Republicans and Democrats agreed

that the old law needed to change

• Legislature passed oil tax reform in 2013
• Passed after 100’s of hours of analysis,

debate & public testimony

THE SOLUTION: What Changed?

• Eliminated the punitive, progressive tax
• Base tax rate increased from 25 to 35%
• Reduced complexity
• Provides incentives for production & investments
• The main goal: Increase production

Repeal Measure on the Ballot

• Why go back to a failed tax structure?
• Production declined every year under the old

tax system Under the old tax structure, production declined by an average of 6% annually for six years. August 2014

What the Critics are Saying

New tax legislation is a tax giveaway Where is the guarantee? By 2015 the new tax structure will produce more revenue than ACES The only guarantee is continued decline in oil production under

• ld tax law.

CLAIM #2 CLAIM #1 THE FACT THE FACT

Source: DOR Dec. 2013

OIL TAX REFORM: It’s already working

OIL TAX REFORM: It’s already working

• Companies have already announced

billions in NEW investments

• Projected new spending $10 billion in 10

years.

• Investments will drive NEW production
• Jobs for Alaskans
• Long-term stability for growth

Alaska’s Future

• Gas project requires a healthy oil industry
• Gas for Alaskans: Fairbanks
• Gas project would be a tremendous boost

for Alaska’s economy

In Review

• 1. Oil is essential to Alaska’s economy
• 2. Oil tax reform fixed a failed system
• 3. It is already working
• 4. Ballot Measure 1 impacts our future

Join our coalition today www.forAksFuture.com

Paid for by Vote No on 1, Anchorage, AK 99509. Bob Berto, Rick Boyles, Leslie Hajdukovich, Linda Leary and Rick Mystrom, co-chairs, approved this message. Top contributors are BP, Anchorage, Alaska, ConocoPhillips, Anchorage, Alaska, and ExxonMobil, Anchorage, Alaska.