Alaskans want bigger piece of oil boom

When Rosemary Ahtuagaruak began blaming an alarming outbreak of asthma cases on oil-field air pollution a few years ago, local elders in her Inupiat Eskimo village cautioned her against antagonizing the oil industry.

They did not want to revert to the pre-oil days of dire poverty when families lacked even basic furniture, she said at a recent conference here. "If you continue to speak the way you do, we'll not eat on tables again," she recalls one elder told her. But Ms. Ahtuagaruak, a onetime health aide later elected mayor of her village, Nuiqsut, continued her critiques.

As oil prices - and oil-company profits - soar and development spreads to previously protected areas, disgruntled Alaskans are becoming bolder in their critiques of the industry. They are spread from the Arctic coast, where Inupiat residents have used oil revenues to move into relative middle-class comfort, to the capitol in Juneau, where oil earnings account for at least 4 of 5 dollars going into the state's general revenue fund, and everywhere in-between. Their charge: the industry exploits the state.

"Alaska, in fairness, ought to get every penny over $30 a barrel," one man complained during a recent Alaska Public Radio Network call-in show. "Why can't we be more like the sheiks or the princes of Saudi Arabia?"

Such sentiments have helped spur a pair of citizen initiatives, possibly headed for the 2006 ballot, which take aim at oil companies' pocketbooks.

One measure would repeal a tax formula, known as the Economic Limit Factor (ELF), that gives tax breaks to smaller North Slope oil fields because they are presumed to be economically marginal.

The "Shelf The ELF" initiative would set production tax rates for all fields at a straight 15 percent, eliminating a formula critics say is outdated and costs the state over $1 billion a year. It is similar to a bill pending in the legislature that would amend the ELF formula so that production tax rates vary according to the price of oil. The bill's backers say many North Slope oil fields that benefit from tax exemptions don't deserve them.

Another citizen initiative would impose a "reserves tax" on untapped energy resources. As long as oil companies failed to ship out the 35 trillion cubic feet of proven natural gas that lie in the North Slope, they would be charged $1 billion a year, according to the initiative.

"This is a way to force the oil companies into putting up or shutting up," says state Rep. Harry Crawford, an Anchorage Democrat and one of the measure's sponsors. He claims the three main North Slope producers - ConocoPhillips, BP, and ExxonMobil - are delaying action on a long-promised gas pipeline to maximize returns on overseas projects.

But oil companies and their supporters say the initiatives would unfairly raise costs and increase financial volatility, making Alaska less attractive for investment. Companies that take on exploration and development risks should not be begrudged occasional windfalls, industry supporters say. They add that marginal costs are growing as fields mature and overall production - now at less than half the peak level of 2 million barrels a day achieved in 1988 - continues to dwindle.

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