As expected, Alaska lawmakers have approved a tax hike worth more than $1 billion on oil and gas producers as their special session ended Nov. 16. In times of high oil prices it is expected the new tax could bring the state an additional $1.5 billion per year.
The state's tax on oil and natural gas producers rises from 22.5% to 25% of net profits. In a change made by the state's Senate, the tax increase is retroactive to June 30. Alaska's House was forced to accept the change as the Senate adjourned after passing its bill on the final day of the special session.
Alaska's energy producers opposed the tax increase. BP Alaska President Doug Suttles said, "I can only hope that once the impact of this legislation is clear, the administration and the Legislature will revisit the issue."
The legislation is known as Alaska's Clear and Equitable Share (ACES), and it was Gov. Sarah Palin's answer to her predecessor Frank Murkowski's Petroleum Production Tax (PPT), which she said wasn't collecting enough revenue for the state.
The PPT was passed last year in a special session following much wrangling between lawmakers and former Gov. Frank Murkowski (see NGI, Aug. 14, 2006). The historic tax rewrite was seen as key to moving forward with the plans for a gas pipeline to allow commercialization of North Slope reserves (see NGI, July 17).
The 46-page ACES bill was released last month and quickly drew a sharp rebuke from the state's oil and gas producers (see NGI, Oct. 8).
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