GUEST COMMENTARY: Alaska Bankers Association: Vote 'no' on 1
The Alaska Bankers Association represents seven state and national banks in Alaska holding over $10 billion in combined deposits and is the voice for a workforce of more than 2,500 across 132 branches, statewide. ABA’s members are job creators, fueling Alaska’s economy by providing the credit businesses and families need to grow.
We help facilitate the flow of capital toward productive uses and are actively lending to businesses across diverse industries such as seafood, tourism, construction and mining, among others. There is one industry, however, that dwarfs all others, supports most state government services and accounts for approximately half of all Alaska jobs — oil. ABA members agree that Alaska’s future prosperity depends on continued and increasing oil production and are united in our opposition to Ballot Measure One.
Revolutionary drilling technologies have led to booming oil production elsewhere in North America. For example, combined oil production in the mature oil-producing states of Texas and North Dakota has grown by over 200 percent to 4 million barrels per day, or bpd, from 1.3 million bpd in 2008. As an association, we have taken keen interest in understanding why Alaska’s oil production has instead declined by over 20 percent to just 0.5 million bpd over this same period.
Tax and regulatory environments have a direct impact on business activity and job creation. We believe the overly aggressive ACES production tax policy — on top of state royalties, property taxes and state and federal income taxes — was a contributing factor that put Alaska at a competitive disadvantage.
In addition, ACES created significant state exposure in low oil price environments and with high-cost development projects. From our vantage point, where ABA members are responsible for over 85 percent of nonpublic commercial lending in Alaska, we see that something has changed in recent months to improve the outlook within the oil sector and we attribute much of this change to the 2013 passage of Senate Bill 21.
It is easy to get lost in the minutiae, but the bottom line is that fewer barrels of oil flowing through the Trans-Alaska Pipeline System is a threat to Alaskans. Arresting the perennial six percent decline rate and growing production from a mature oil basin such as the North Slope, where remaining assets are expensive and complex to produce, will take significant investment capital and a regulatory environment conducive to risk taking.
We Alaskans must recognize and adapt to the true, competitive nature of the world around us. Capital is mobile; it goes and stays where it is welcomed and well treated.
One of Ben Franklin’s best-remembered and most useful aphorisms is “a small leak will sink a great ship.” Under ACES, Alaska had fallen to fourth place among oil-producing states with the expectation of further decline.
Our Legislature and Administration considered and hotly debated the totality of risk and effect of oil tax policy last year and ultimately settled on SB 21, deciding that the best way forward was to focus on the long-term for future generations. Just this week, 13 months after SB 21 was signed into law, it was announced that, for the first time since 2002, oil production off the North Slope did not decline from the previous year. Next month’s primary election presents us all with the opportunity to cast our ballots in favor of our state’s future economic well-being by voting “NO” on Ballot Measure One.
Everhart is the chair of the Alaska Bankers Association and the regional Alaska president for Wells Fargo NA. This opinion represents himself and the ABA.