Parnell Pounds the Table

Oil drilling rig in Prudhoe Bay

There’s an old saying, “When the facts are on your side, pound the facts. When the law is on your side, pound the law. When neither is on your side, pound the table.”

But in Alaska, when it comes to cutting oil taxes, that strategy really isn’t a winner.

With all-time high levels of employment and investment on the North Slope, and the oil companies raking in record profits, the facts are definitely not on the side of the Big Oil Tax Giveaway.

With a constitution that requires Alaska to reap the maximum benefit for our natural resources, the law doesn’t favor giving away $2 billion a year in oil tax revenue in exchange for industry commitments of precisely nothing.

And with wishy-washy Capt. Zero at the helm and his merry band of misfit commissioners completely unable to articulate a justification for his giveaway, table pounding is unlikely to provoke anything more than mild amusement.

So, what’s a governor to do when he doesn’t have the facts, the law or intimidation on his side?

First, buy a more compliant and unquestioning Legislature. Thanks to the determined gerrymandering of a redistricting board controlled by Big Oil’s Republican soldiers, that’s Mission Accomplished.

Appearing before the group of oil industry contractors known as the Alaska Support Industry Alliance, Commissioner of Revenue and legislative punching bag Bryan Butcher recently gushed, “I’m so excited about the new Legislature!”

I bet. Legislative leaders are already stacking the relevant committees with people who can be counted on not to ask tough questions.

Even so, with at least a few members of the public paying attention and most Alaskans overwhelmingly opposed to the giveaway, the new Legislature will need some cover. So what did Gov. Giveaway do just this month? He quietly set in motion a scheme to make the Giant Giveaway appear to be a Baby Giveaway.

Here’s how he’s doing it:

Step 1, change how the state estimates future oil production. The governor is required to forecast what he expects oil production to be for the next decade and calculate how much revenue it will bring in.

For years, the state has done this by asking the oil companies, which are legally required to tell us. Because the companies run the fields, one can safely assume their honest forecasts are the most accurate available.

But under the direction of the former Conoco lobbyist who now sits in the governor’s chair, the state has started taking the numbers the oil companies give us and discounting them. As a result, the state now forecasts that by 2017, production will be more than 100,000 barrels a day less than projected just a few months ago.

That new forecast includes zero production from any new finds or shale oil, which some knowledgeable observers say could reach 600,000 barrels a day in the reasonably near future.

This bogus accounting achieves a couple of politically useful things. First, it serves to further scare the electorate into believing Alaska is running out of oil. (The oil companies testified in court recently that they expect the trans-Alaska pipeline to operate until at least 2065. Maybe they plan to ship tundra.)

Second, a projection of less oil going down the pipeline means the governor can shrink the estimates of just how much money he’s actually proposing to throw at the oil companies. The “$2 billion-a-year Giveaway” magically and immediately appears to be hundreds of millions of dollars less.

This sleight of hand works for the outlying years, when projections are more speculative and subject to manipulation, but how can the governor game the estimates for the next couple of years, where they’re more closely tied to known production?

Unfortunately, he has a plan for that too. He’s increasing the state’s estimate of the cost of producing a barrel of oil by nearly 20 percent from what he projected just six months ago. If oil costs more to produce, its value goes down, and so does the expected tax revenue. Under his new, doctored numbers, estimates of the tax revenue for next year have dropped nearly $800 million.

Voila! The amount his tax giveaway will cost us appears to fall still further — way below the reality.

As an added bonus, the scheme provides a pure political benefit to Gov. Giveaway.

Once the Legislature rubber-stamps his tax breaks and actual production turns out to be far better than the state’s new pessimistic estimates, he can claim credit for resurrecting the industry with the Big Giveaway.

“See, my tax breaks worked. We have all this additional oil production and revenue.”

Our hero.

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