Alaska doesn’t have a budget problem; Alaska has bribery problems, and gullible legislator problems.
Alaska allows oil companies to extract fair payment for their services from net oil production revenues. Additionally, they keep 90 percent of our ownership equity; equity other owner states keep. At today’s prices, the big three are making over $17 per barrel plus cost of production and delivery from our oil. (See ConocoPhillips’ quarterly reports) That’s about $9 million per day, or $3.2 billion per year.
BP and Exxon have agreements, with less friendly governments, to produce their oil for cost of production and delivery, plus $1 per barrel. $3.76 per barrel would exceed their international average net profits. If that was what the Legislature was to allow them, Alaska would receive an additional $2.5 billion this year.
Ten years ago I helped the FBI bust six legislators for taking bribes to give Alaska’s oil away. For six years the oil companies lost control and Alaska saved up $16 billion; that’s the savings this Legislature is once again reaching into to cover the deficit; savings now depleted because Alaska’s legislators are once again giving our oil away.
Why would Alaska’s legislators agree to pay four and one half times more than a fair market payment for production services? There is only one logical answer and its bribery.