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I got something wrong in my last post about when to change the gas tax. Here is Pat Galvin’s explanation:

In the hearing yesterday, I said that a year ago when we were bringing forward AGIA I had told them that we were focused on gasline issues, and that we had not yet spent much time on tax issues. At that time, I had told them that my confidence level in the gas tax rate was not high, because we had not yet looked at it. The tax rate was not critical because AGIA locked in the rate that would be in place at the time of the initial open season, giving us time to make any necessary changes.

I went on to say that since AGIA passed, we have spent a great deal of time looking at tax issues, mostly focused on oil. However we have looked at some gas comparisons, and much of that information was presented to them a few weeks ago by Marcia Davis. What Marcia showed them was that in the other jurisdictions that have oil and gas taxes based on net-profits, the same rate was applied to each. I also told them that we did not have the same level of economic models for North Slope gas projects as we did for oil projects because we do not yet have sufficient data on transportation costs. Based on the information we current have, I did not see any reason to change the tax rate on gas.

Finally, I reiterated what I said during the ACES special session, that we would look at the gas tax again when we knew more about the economics of a gas pipeline, and if a change is warranted, we would address it then.