A gusher of oil money to save an oil tax cut in Alaska

From the Anchorage Daily News comes the latest accounting of how much the oil industry is spending to save a tax cut it received last year from the generous state government.

As of Feb. 5, the total is $3.5 million, with the lead campaign donors being Exxon Mobil and BP. On the other side, the campaign to “repeal the giveaway,” as it’s fashioned itself, had raised $104,000 by Dec. 31, the date of its last disclosure report. The repeal measure will be on the Alaska primary ballot on Aug. 19; a tsunami of oil industry commercials to save the tax cut is already swamping the airwaves up north.

Voters in other oil-producing states, especially California, should pay close attention to the Alaska campaign as a harbinger of efforts to roll back oil severance taxes nationwide -- or to head off new taxes.

In California, an effort to gain legislative enactment of an oil severance tax has been launched by Tom Steyer, a San Francisco hedge-fund billionaire and progressive philanthropist. When we reported on his effort in mid-December, we mentioned the absurd fact that California is the only oil-producing state without a severance levy, which taxes oil as it’s taken out of the ground.

That prompted a largely fact-free reply from Catherine Reheis-Boyd, president of the Western States Petroleum Assn., who blamed the “significant decline in oil production” in Alaska for its previously high severance tax, and repeated the claim of Alaska Gov. Sean Parnell that cutting the tax would increase production.

As we pointed out, this is baloney marinated in oil. Oil production in Alaska has been on a steady decline since 1988, unrelated to the rise and fall of its oil tax (last raised by Gov. Sarah Palin). Petroleum economists generally counsel that state oil taxes have no effect on production decisions, which are guided by the world market price. Nevertheless, Parnell pushed through an oil tax cut that could cost his state more than $1 billion a year in revenue.

The oil industry claim that low taxes mean higher production will continue to walk the land, like a zombie. In Alaska it undoubtedly will be backed up by millions more of industry campaign funding before the vote is taken this summer. And if Steyer’s campaign takes hold in California, soon we’ll be seeing plenty of lavishly produced and utterly mendacious oil industry commercials on our airwaves too.