Coghill misses the mark with claims my figures on SB 21 oil production are wrong
Sen. John Coghill doesn't want to hear that oil production in Alaska today is lower than it was five years ago when SB 21 was approved.
He claims that the statement I made here in a recent column to that effect is an "inaccurate and inappropriate comparison."
Coghill made his case in a piece on the Republican Party's unofficial blog. He's wrong.
Coghil voted for SB 21 in 2013 and was solidly with those who said it would lead to plenty of new production, so I understand why he objects to what I wrote.
One thing to say about SB 21 is that Coghill and other proponents oversold it as a miracle cure for Alaska's financial situation, which it wasn't.
They are still overselling it with a fiscal dream that oil-will-fix-everything that the Permanent Fund can't. If oil prices don't rise and stay up, this will mean bigger withdrawals from the Permanent Fund.
The SB 21 discussion was a small piece in a column on how $14 billion in state reserves has vanished over the past five years because of the oil price collapse, while Coghill and his GOP colleagues in the Senate blocked new taxes.
The Republicans in the Senate have supported a reduction in the Permanent Fund Dividend, which I think is a necessary step, but they have refused to consider other measures to fix the fiscal mess aside from spending savings.
I was particularly irked to read that Coghill used the term "alleged 2013 figure" to describe the statistic I quoted for oil production five years ago, as if I had made this up.
The figure comes from this chart published by the state Department of Revenue for fiscal year 2013.
Coghill says it is "inappropriate" to compare current oil production to spring 2013, when SB 21 was approved, because the effective date of SB 21 was seven months after that. He wants to use Jan. 1, 2014 as the start date. He compares calendar year 2014 to the first part of 2018, to back up his statement that oil production has increased.
This massaging of the numbers is inappropriate. You can not compare the first five months and three weeks of calendar year 2018 (production is always lower in the summer when there are cutbacks for maintenance) to all of calendar year 2014 and conclude that the state has seen a 28,000-barrel-per-day increase under SB 21. But that's what Coghill said in attacking my work.
It is a relatively short period since the enactment of SB 21, but the state uses fiscal years for consistency, which is what Coghill should do.
In fiscal year 2013, which was about to end when SB 21 was approved, oil production averaged 531,600 barrels per day, according to the Department of Revenue. It was 530,000 in fiscal year 2014. It dropped in FY 15 to 501,000, and rose in FY 16 and 17, hitting 526,500 last year.
In fiscal year 2018, which is to end June 30, oil production is expected to average 520,000 barrels a day, according to a state projection from June 14. That is a decline of about 6,000 barrels a day from fiscal year 2017.
With various new projects, production has become relatively stable, though it is lower than it was when SB 21 was approved.
As I said in that column, a comment ignored by Coghill, "There are North Slope projects on the horizon and oil production may have stabilized, but the 2018 reality is still short of the 2013 vision or the claims made during the 2014 campaign to keep the tax cut from being repealed."