SB 21 was oversold as a miracle cure for Alaska oil production
To mark the fifth anniversary of the passage of the SB 21 overhaul of Alaska’s oil tax law, I wrote a column eight months ago saying that the law had been oversold by proponents as the miracle cure for Alaska’s future.
The SB 21 discussion was a small element in a column on how $14 billion in state reserves had been spent over five years because Senate intransigents blocked revenue measures, despite the oil price collapse, claiming to have found a no-tax cure for Alaska’s finances. They might as well have promised that Mexico would pay for it.
Sen. John Coghill responded with a column, published in Suzanne Downing’s Republican Party blog, that claimed I was wrong to compare anything to 2013 because SB 21 wasn’t in effect until Jan. 1, 2014. He classified me as a “naysayer.”
“An accurate assessment can only start in 2014,” he said.
He compared calendar year 2014 to the first half of 2018 to back up his statement that oil production had increased by about 28,000 barrels a day, proving SB 21 had worked.
“For 2018, as of June 20, 2018 at 3:23 p.m., the average barrels produced per day was 540,763,” he said, citing the figures from Alyeska Pipeline Service Co.
He said 2014 production averaged 512,827 barrels a day, using a figure from the state Department of Natural Resources that was a bit lower than the statistic used by the pipeline owners.
It was wrong to compare the first five months and three weeks of calendar year 2018 to all of calendar year 2014 and conclude anything, but that’s how Coghill chose to play it.
So to update this situation, let’s use the pipeline company numbers comparing 2014 to all of 2018.
According to Alyeska figures, the pipeline averaged 513,441 barrels per day in 2014. In 2018, it averaged 509,315 barrels per day.
That’s a decrease.
Coghil voted for SB 21 in 2013, aligned with those who said it would lead to plenty of new production. I understand his defensive attitude.
As I said in that column eight months ago, 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reality is still short of the 2013 vision or the claims made during the 2014 campaign to keep the tax cut from being repealed."