More than three years following the passage of this bill, Governor Palin's assertions regarding ACES have come to fruition. ACES has created a stable environment for investment and development of oil and has provided a boost to Alaskan jobs and the economy, while concurrently boosting state revenue. In short, ACES has been a success.
With the signing of this bill, we can turn the page and look forward to a new era of stability and investment opportunities developing Alaska’s resources, creating new jobs and a strong economy for years to come.
In the year following the passage of ACES, the number of oil wells in Alaska increased, indicating that ACES created a favorable environment for development. From the year prior to the passage of ACES to 2009, capital investment on the North Slope increased 33% to $2.2 billion, indicating that oil companies are making investments in future development. More recently, a poll of petroleum executives indicated that a greater percentage of executives thought that ACES "promoted investment" than 2/3 of the 24 other states who were included in the survey. Earlier this month, a Spanish oil company, Repsol, announced that it would be devoting more than three-quarters of a billion dollars to North Slope exploration (emphasis mine):
"This deal is a perfect fit in our efforts to balance our exploration portfolio with a lower risk, onshore oil opportunities in a stable environment," Repsol CEO Antonio Brufau said in a statement.
ACES has been beneficial to oil companies of all shapes and sizes. In fact, since the passage of ACES, the number of oil companies filing tax returns with the state of Alaska has doubled indicating that more and more companies are seeking to develop in the state. Actually, Alaska has the second most favorable business tax climate in the country, moving up two spots since the passage of ACES. In fact, since 2006, the state of Alaska has given $3 billion in investment incentivizing tax breaks to oil companies. ACES taxes net profits rather than gross revenues (like Governor Murkowski's oil tax structure) and offers tax credits to oil companies, which yielded high profits for large oil companies like ConocoPhillips and high praise from smaller oil companies. In fact in the year following the passage of ACES, ConocoPhillips Alaskan oil production accounted for 29% of its worldwide income despite only accounting for only 12% of its output. The flexibility of ACES' taxation mechanism in conjunction with changes in oil prices has proven to be beneficial to ConocoPhillips as well. When oil prices dropped in 2009, their Alaskan profit's percentage was higher than in 2008 when oil prices were high, ranging from 35-55% of their total profits in the first three quarters of 2009. Additionally, Former Republican Alaskan legislator, Ray Metcalfe, highlighted that ACES provides a much lower risk for development and 10 times the profit per barrel for oil companies in Alaska compared to oil rich Iraq. Current Alaska state senator Bill Wielechowski spoke to Bob and Mark in February about how ACES has benefited both oil companies and the state of Alaska (H/T Kelsey):
In addition to the benefits ACES provides oil companies, ACES has proven beneficial to the people of Alaska--both in the way of jobs and state revenue. After all, the compass that guided Governor Palin in this effort was the Alaska constitution, which stated that resource development must be done for the maximum benefit of the people. Oil jobs have increased since the passage of ACES with 2009 bringing a record high number of oil jobs. Additionally, even in spite of the economic recession in recent years, Alaska's job market, with 1/3 of jobs related to the oil industry, has remained strong. Alaska's unemployment numbers have remained lower than the national average since 2009. Alaska's economy ACES has also generated more revenue for the state since its passage than the previous two oil structures would have under current oil prices and production. Such revenue helped allowe Governor Palin to put $5 billion in state savings and forward fund education while she was governor. Additionally,a portion of oil revenues provide Alaskans, as resource owners, with a permanent fund dividend, which is essentially akin to stockholders receiving their share of a company's profits.
When Governor Palin signed ACES into law, she asserted that this legislation would provide stability, spur investment and development, strengthen the economy, and create jobs. By all accounts, Governor Palin's assertions ring true, and her detractors must eat crow once again.