Friday, February 24, 2012

Go Pedro

The Alaska Dispatch has a good letter from Pedro van Meurs (LINK).  Pedro has replied to the Concerned's invitation to run for Governor.  Both the invitation and the reply are humorous and point to the root cause of Alaska's ongoing failure to build a gas pipeline.  Pedro says:

Alaska has not lifted a finger to attract new investment from a fiscal perspective. In fact, Alaska does not even have useable fiscal terms for heavy oil, shale oil and natural gas that can be published in a simple investor brochure. How can Alaska attract investors in this way when other nations (Canada, Lower 48, Australia, Brazil, et al.) offer attractive well defined terms?
Unless substantial policy and fiscal changes are introduced that encourage large scale investment in heavy oil, shale oil and natural gas in Alaska, as is being done in competing jurisdictions, the future of oil and gas production in Alaska is bleak.
Sadly I agree fully with the last paragraph.  At today's gas prices I can't understand why Alaska doesn't take bold action to get things rolling. I know the Alaska constitution says "The legislature shall provide for the utilization, development, and conservation of all natural resources belonging to the State, including land and waters, for the maximum benefit of its people" but too many Alaskans focus on the "maximum benefit" rather than the whole sentence including  "utilization, development".  No gas will ever be utilized or developed unless Alaskans accept what Pedro is telling them.

My idea of a good incentive program is a combination of tax holidays and flat taxes. Pick a flat tax rate for new oil and gas and declare a tax holiday for new oil and gas sales.  Imagine the effort that would go into a gas  pipeline if there was a potential payoff for early completion, otherwise sit back and watch the rest the world trade LNG, develop shale gas resources and build the big pipelines.  Alaskans can cling "maximum benefit"but its really about competingPedro tried to warn you.

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