In a nutshell, if oil reaches $100 per barrel, Iraqis will keep the entire $100. –––– From the $100, Iraq will:
(1) pay Shell Oil $1.39 for each barrel they produce,
(2) reimburse Shell for actual wages paid and materials purchased, and
(3) Iraq will tax Shell’s profits and Iraq’s parliament reserves the right to raise or lower it’s tax on oil company profits at any time.
Alaska pays five to ten times as much for the same service to oil companies who threaten to abandon Alaska if we don’t let them keep more of the profits, reduce their taxes and contract away our right to raise or lower taxes on oil. No government in the world has ever bargained away its government’s right to raise or lower its rate of taxation.
Alaska’s oil fields have never been nationalized as Iraq’s were. BP is buying back in even though thirty years ago Iraq took its oilfields away and confiscated their investments. Alaska’s oil is not in a war zone and isn’t likely to be seized or become the subject of a civil war over control.
Until Iraq’s open bidding process forced oil company bidding secrets out into the open, oil companies around the world were very successful at keeping the terms of their contracts for developing oil from inquiring eyes.
While it was obvious for decades that other oil producing states were getting far more for their oil than we Alaskans, it was not until now that we Alaskans could point to proof beyond the shadow of a doubt that Alaska’s terms are quite generous. We now have proof that the same oil companies who tell us they are going to leave Alaska unless we pay them more are investing in much riskier oil in exchange for far less profit.
When Iraq called the bluff of ConocoPhillips, Exxon, and BP they were all telling Iraqis “they would leave Iraqi’s to their own devices unless Iraq paid them $4 to $5 per barrel plus expenses to develop their oil.
ConocoPhillips, Exxon, and BP have since all agreed to step into a war zone to develop Iraq’s oil fields charging a service fee of under $2 per barrel.
We Alaskans still have several legislators depending on oil companies for campaign funds. Those same legislators are now fully aware that the oil industry has been bribing numerous legislators for many years, in exchange for sweeter terms on oil production. –– Yet several oil dependent legislators continue to treat oil as a trusted source of valuable information as they champion their quest for higher profits.
And most egregious of all, Alaska’s media has never armed Alaska’s voters with the knowledge they need to distinguish fact from fiction when oil companies plead poverty.
[Ray Metcalfe may be reached at (907)-344-4514]