How Alaska Calculates Oil Taxes and Royalties

Featured — By on January 16, 2013 at 4:24 PM

When the Alaska Policy Forum first started to work on this project, we were warned that whatever we create might be too simplistic. The reason for this is because oil and gas tax policy in Alaska is so complex, most people have neither the patience nor the desire to be at least somewhat informed about how it works and how it needs to be changed. The resulting debate is usually reduced to little more than a game of ambiguous, undefined terms, some crafted with some populist concern in mind, some with corporate concerns in mind, but neither crafted to effectively communicate.

Our aim in creating this calculator is to teach in terms that the average person can understand. This should help Alaskans understand the ongoing debate on oil taxes. It was not created to serve the state in calculating a producer’s tax bill. That’s important, because there are obvious limitations to the calculator. Please keep that in mind as you use it.

We hear from both sides of the oil tax reform effort: one side says it stifles production and Alaska is losing to Outside competition; the other side says it is a “giveaway” to the big oil companies. We are trying to cut through the chatter and noise by providing a basic tool to understand the debate. We hope the “person on the street” will understand more of the discussion on oil taxes with this tool.

To see the progressivity of the ACES tax, simply put a low figure in the price/barrel ($25) and then put a much higher price/barrel, such as $110. Then put $180 as the price/barrel and note the net take of the government and the producers.

If you find that something isn’t clear or explained well enough, send us an email and tell us. When you get feedback from people after posting it on Facebook, send us the feedback.

Click here to go to the calculator.


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