Ketchikan: Vote “NO” on Proposition 1, and Focus on Opportunities to Participate in the Oil and Gas Industry

By Jason Custer, Ketchikan Chamber of Commerce

September 19, 2020

Saturday AM

The Greater Ketchikan Chamber of Commerce urges residents to vote “NO” on ballot measure 1, the deceptively-named “Fair Share Act.” Ballot measure 1 targets the oil and gas industry with increases to production taxes. Increasing taxes will strongly discourage industry activity and investment in Alaska, and will lead to decreased production. Less production means less revenue and fewer jobs for the State, as well as fewer deposits into the permanent fund. The concept of targeting Alaska’s oil and gas industry with high taxes – when industry is already distressed by low oil prices and COVID-10 challenges to operations – is a classis case of threatening to kill the good that has consistently laid golden eggs.

The contribution the oil and gas industry makes to our state today is already tremendous, and goes far beyond the production taxes which ballot measure 1 seeks to increase. The McDowell Group reported that in 2019, the oil and gas industry paid $2.7b in taxes and royalties to the State of Alaska. This included $364m deposited into the Alaska permanent fund. Total wages were $4.8 billion in 2018. Every 1 job at an oil and gas primary company results in 8 more support jobs, plus an additional jobs supported by oil-related taxes and royalties. Together, oil and gas-related jobs make up 24% of all jobs in the State.

Oil and gas tax revenue has supported numerous capital appropriations investments in Ketchikan, including the expansion of our hospital, investments in renewable energy projects like Whitman Lake and the Swan Lake dam raise, creation of our library, additions to Ketchikan’s hospital, and expansion of the Ketchikan Shipyard – projects which define us as a community. State-wide, revenue paid from the oil ang gas sector to the unrestricted general fund pays for 76% of the State’s match to Medicaid program funding, and 60% of education and early development – the equivalent of $7,479 per student enrolled in K-12 public schools in Alaska.

Alaska is fortunate to have oil and gas reserves capable of supporting jobs, royalties, payments to the permanent fund, and tax revenue. But, for those benefits to occur, industry must be present. If taxes are raised, there may not be many businesses remaining to pay them, or to provide jobs. New taxes and threats to high-quality jobs could not come at a worse time.

ConocoPhillips’s second quarter SEC filing shows that it lost $141m in Alaska, while continuing to pay taxes and royalties to the State. ConocoPhillips was poised to make a $25 billion investment in Alaska over the next 10 years, but recently told Petroleum News that it is holding off on its exploration program until it understands whether ballot measure 1 will result in higher taxes.

To increase the benefits Ketchikan receives form the oil and gas industry, we should focus on increasing the role which our community plays in the industry. There are opportunities to promote Ketchikan as a remote working hub for the oil and gas industry, to empower businesses to participate to a greater extent in the industry’s substantial supply chain, and to market our shipyard for shipbuilding and repair and oil field fabrication services. We have a diverse marine industry sector and world-class ports and harbors, which we can promote to industry. And, we can continue to empower out children with high quality STEM education and encourage them to consider high paying jobs within the oil and gas sector.

In conclusion, please vote no on ballot measure one. The best way to increase the benefits were receive from the oil and gas industry is to increase production, increase industry investment in our state, support new business activity and jobs, and increase the role which Ketchikan plays in the oil and gas industry.

Jason Custer

Secretary, Greater Ketchikan Chamber of Commerce

For the Chamber Board

Ketchikan, Alaska