Dear Lib-Alaskans

Dear Lib-Alaskans;

After studying Senate Bill 21 which passed through the chambers during the 2013 legislative “open” season, a controversial bill which has found favor in the liberal community behind a repeal effort, I caution that effort as it is premature. I am not an advocate for the oil industry, just an individual that thinks before speaking out. So I have thought about the bill, studied the language on my own dime, analyzed the repeal benefits, so with that said have earned my time to speak-out. So please listen up! “Big Oil” is the bread'n butter for Alaska, that has been the case for 30+ years by now. And we do have something to show for it, besides bridges to nowhere along with a Cape Canaveral without any rockets to launch and still reigning in as the pothole capital of the 3^rd world. And even though the state has reaped $billions$ through resource development and spent just as much on things still mysterious, we find today some leftovers – a stash the politicians have not the liberty to throw away – as there exists a “Golden Goose” egg that sits protected away with a $50-Billion value. Yes, the “Constitutional Budget Reserve”, reserved for our future. But we do not want to repeal something that may allow the brats in office to raid that still protected hen-house. They can raid that stash if need be, so think about the repercussions if a repeal gives them that luxury! Simply put, the oil is running out, as the oil flowing through the TAPS is falling far short of the 2-million barrels per day status it enjoyed back in the early 90s. Today, the pipeline operates at 1/3 of its capacity. And for the 3-decades that oil flowed and allowed Alaska to reign as the nation's biggest producer of energy and remain a sales tax free district for us residents, the natural gas that was burped up with the oil when it came topside from a well, well that gas had no business except to be directed back into the oil formation - as an aid to loosen up more oil for production which means more $$$. Sure “Big Oil” made millions its gamble here in Alaska, as we like to share the wealth. Now the new law - SB21 or MAPA for “More Alaskan Production Act” - it isn't all just a “Tax Break” for “Big Oil”. Sure it allowed less for us and more for them, with a $2-billion tax break following the passage and the governor's Hancock, but we must look at that giveaway in perspective to what we may reap in return. Their gain is not our loss! So herein is my promotion as to why it is premature too even think of a repeal, not without looking into what the existing bill means for the future of Alaskans. In the old public law – which is what we will get back if a repeal is successful – there is this thing called the “Flip Switch” and here is how it works. With efforts to build a large diameter natural gas pipeline for producing LNG for export, that endeavor takes a boatload of gas. Which means the “Flip Switch” is turned “On”, it kicks in and as natural gas once considered “stranded” finds a ways and means to get to market, that gas is no longer available to assist in the oil production. Now the “oil” becomes a candidate for the “stranded” status. Which means somebody suffers the consequences, - we Alaskans that is - as the oil being produced when there exists a market for getting rid of the natural gas, it finds huge tax deductions through the “Switch”. It is complicated and has to do with a calculation called the “Back-out”. When gas is used for other things, like an export, the “Back-out” re-calculates the gains & losses from not having the gas for recovery efforts. And it is a skewed calculation, which is always a gain in favor of oil over gas – the reason we loose out. Look, after 30-years, they know how to write the laws to favor their bottom-line! And since oil and gas are valued upon the energy content to boil water, when you consider the price of oil with that of natural gas in over-supply, that production tax loss is a great deduction for “Big Oil”. Remember, these are oil companies working on the “slope”, not really entertained by the economics of natural gas as their main portfolio and component for economic success. It isn't called “Black Gold” for nothing. And according to our own Revenue police, “With the flip switch, state tax revenue can drop significantly under certain price scenarios, including current prices”. So when the laws were re-written, SB21 fixed that loophole. It basically canceled out the “Back-out” methodology and fixed the oil production tax at 35%, 3 percentage points higher then what was found in the old rule book. So over time, that increase will re-coup any losses. Appeal the law, and the “Flip Switch” is back in the picture. So unless you have read the entire bill, unless you are privy to how and why these “Back-out” agreements are worded and the legal challenges should the state litigate such language, we are treading down the wrong path with an appeal effort. If SB21 is repealed, then it will be but a cloak and dagger scenario – “Big Oil” gets the cloak, we get the dagger where it counts. And with that, the legislative brats down in Juneau will come to the rescue and pull away that dagger, out of the wound and use it to tear open the “Reserve”, and we will be victims of a double jeopardy castration! “Don't think twice, it's NOT alright” to repeal this Bill!