Opinion: Fair and competitive oil taxes are working

There is a resurgence in oil production and jobs in Alaska that is directly related to our current oil tax policy. Senate Bill 21, a fair and competitive tax policy, replaced the antiquated ACES tax structure that drove down petroleum investment for more than a decade. Thanks to S.B. 21, Alaskans have the greatest opportunity of our generation on the North Slope today.

Some present and former legislators argue that S.B. 21 was a mistake, but the facts speak for themselves.

The Willow and Pikka projects, years in the making, are in active development. These and other robust investments in Alaska’s future would not have occurred under the previous punitive tax regime. Between the Willow and Pikka projects alone, the oil and gas industry is spending over $10 billion in Alaska in the next few years, with each project generating 2,500 construction jobs and hundreds of operating jobs.

Job numbers are showing steady gains, buoyed by the surge in oil and gas work on the North Slope. June’s statewide job count was up 5,200, or 1.5%, from June 2023.

Alaska’s oil and gas companies spent nearly $4.6 billion in the private sector in Alaska in 2022 and supported 1,000 local vendors and businesses by purchasing goods and services from Alaska companies.

For every person working directly for an oil and gas company here in Alaska, another 15 jobs are created, resulting in nearly 70,000 jobs statewide.

Oil production forecast numbers are way up. North Slope production is expected to exceed 630,000 barrels of oil per day by the end of the decade, up from 442,348 barrels on Aug. 15, 2024. By the year 2032 the oil industry is on pace to produce more barrels of oil per day than any time in the last 20 years. This will mean more revenue for the state, more jobs and a stronger Alaska economy.

To expect that oil companies would continue to invest tens of billions in risk capital on the North Slope while the State government takes an inordinate share of the profits defies common business sense. Fortunately, a majority of Alaska voters and legislators have wisely considered the facts and opted to maintain the tax structure adopted by S.B. 21.

With a stable and competitive oil tax structure, investment dollars, job numbers and oil production can continue the exciting trajectory for generations to come.

Joe Schierhorn, chairman of Northrim Bank, and Jim Jansen, chairman of Lynden, are co-chairs of the KEEP Alaska Competitive Coalition. The mission of KEEP Alaska Competitive is to promote and preserve competitive, fair and stable taxes on Alaska’s resource industries to enhance investment, jobs and production to secure Alaska’s long-term economic future.