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holy shit. that's a 30% tax at current prices. We have recently seen 110/barrel so consumers could easily deal with it. But given the elasticity of demand for

holy shit. that's a 30% tax at current prices. We have recently seen 110/barrel so consumers could easily deal with it. But given the elasticity of demand for something like oil, this will negatively affect the oil glut recovery by slowing demand. Speaking as an Alaskan where our entire economy is driven by oil, our government is running a HUGE multi billion dollar defecit due to revenue shortfalls stemming from oil prices. We would like to see increased demand for oil to burn through the supply glut quickly to get prices back to at least $70 per barrel. Regardless of Obama's plan it's going to take years and years to get back there if ever. The real issue is our state government can't afford to operate without levying any new taxes on the general population. The cost of living here is already astronomically high, plus we've been in a recession since 2012, and a tax like this is not going to help our situation at all. give it a few years and alaska may look like a ghost town. The fact that I am a programmer who works on federal stuff, my position is not really in jeopardy but the majority of my friends are engineers who depend on oil and gas. Worst case scenario I can take a remote job and probably get a raise for doing so. Maybe then I'll be able to afford a house up here haha. Bottom line is the USA now produces as much oil as Saudi Arabia (albeit with more than double the operating costs). We are much larger than they are and far more diversified, so as a nation we are able to withstand this sort of thing but if you examine places like Texas, Alaska, North Dakota, Oklahoma etc this oil price situation is going to financially destroy hundreds of thousands of people and dramatically affect millions of us. Gas prices also are somewhat less elastic when sliding left on the supply demand graph. so even though prices are 1/4 what they were, we're only seeing gas prices at 1/2 the rate they were. This means there is not as much of a benefit to consumers as you would think from these prices. Worth it? who knows. No matter what alaska is in a world of shit.

mozumder 11y ago
Yah Alaska really needs to figure out an economy that's not based on selling things they find in the ground. They need to learn from California and New York and other places where people have figures out how to make money off of ideas. You need smart people for that, though.
- douche 11y ago
  Eh, you kill the resource extraction industries, and all you're going to have left will be the homesteaders and some tourist trade. It'll look like the coast of Maine, at best. People aren't going to freeze to death up there if there isn't free land or easy money.
  - gnarbarian 11y ago
    It'll be like Maine except we will have triple the cost of living. Anchorage will look like Detroit and the bush will look like rural mongolia 100 years ago. Maybe we'll even have to run the iditarod for real again to try and get vaccines/food/supplies to nome.
    - zardo 11y ago
      I grew up in the bush. Without support from the government, it would be amazing if they did that well. They don't have the culture and population to live off the land completely again. It would be the apocalypse out there.
- gnarbarian 11y ago
  Funny you should say that. I agree with some aspects of your complaint. But I place the blame on trendy tech companies and wonder why we don't see more investment/activity from tech firms here. Oil has been what makes money in AK for the last 35 years, We're not going to change overnight. There are attractive things for tech startups here. In Anchorage I have a gigabit home internet connection. I'm Sr. Programmer, I've been in the industry for 10 years, have a CS degree and I only make $70k per year. In other words we have a supply glut for programmers in Anchorage. I could make more in Cali, I'd have to leave my california illegal guns with my family first. I could also forget about hunting and fishing with my dad every weekend. I bet the the best backcountry snowboarding in california is a far cry from what I have an hour from my house. The real issue is I derive value from what I can do in my time off here that I can't do anywhere else in the world. There is talent up here that can be tapped for pennies on the dollar when compared to NY or SF. I'm sure there is even more talent who would like to move here because it's friggen awesome[1]. I wonder why we don't see more startup activity here, where you can actually operate a business and hire good people for less than six figures. Meanwhile the employees can rent apartments or even buy houses and have a mortgate with a 10 min bike commute to the office for around 1k per month. Sure seems silly seeing all those people pay out the ass for an apartment to commute two hours to an office the startup can barely afford with no parking. You would think a bunch of software engineers would be able to solve a simple network optimization problem by pushing resources to the edge of the graph but it seems like an office in a trendy location and insane taxes and rent is more important than a sustainable operating budget with work life balance. But of course us Alaskan's are the dumb ones. [1] http://imgur.com/a/llGid http://imgur.com/a/llGid
thrownaway2424 11y ago
30% is not a "holy shit" level of fuel tax. The federal fuel tax in 1993 was 18.4c per gallon (and remains at that level), while crude oil that year cost as little as $13/barrel. That's a 57% tax. Of course the real value of the federal fuel tax has monotonically declined through inflation, since it remains at a nominal 18.4c/gallon. In civilized countries the fuel tax is generally well over 100%. In Switzerland for example the tax is .75/liter, or about 120CHF (~$120) per barrel.
- DrScump 11y ago
  <The federal fuel tax in 1993 was 18.4c per gallon (and remains at that level), while crude oil that year cost as little as $13/barrel. That's a 57% tax.> Your math eludes me. National average gasoline price for 1993 was $1.10, yielding less than 17% tax.
  - thrownaway2424 11y ago
    This article is using the price of crude oil as the denominator. In 1993 Brent Crude Oil varied between $13 and $20 per barrel.
    - DrScump 11y ago
      But the fuel tax figure you quoted was for gasoline, not crude. You were comparing apples to Orangesicles.
- gnarbarian 11y ago
  All except one of those "civilized" countries don't produce oil. They also all have much higher population densities where public transit makes sense and most people can't even afford to buy a car. That is not analogous to the situation here. There isn't a single European country with a population density so low it is close to Alaska [1]. Even Norway who is most similar to AK and is an oil producer has much smaller towns that individually are less spread out and are more easily served by public transit as a whole, norway has 30x the population density of AK[1]. In these civilized utopias most people can't even consider buying a car there due to artificially inflated costs from over regulation and taxes. I like a 4x4 truck that can get me to work in shitty weather. I like being able to afford to drive a boat around the ocean on the weekends and catch halibut. None of this pertains to my argument though and only serves to offer a bit of perspective. Regardless of consumer costs ($10 more is still a far cry from $110) What really matters here is the supply glut which causes a shortage of demand per unit of oil. This kills margins and rules out any new investment and developments in Alaska. These are the things that drive jobs. High margins fund the state government and new development. Low prices mean layoffs across the board before we even think about a huge tax stabbing into demand. In other words, that tax will retard oil's recovery by artificially suppressing national demand for oil. US consumers can withstand it no problem. But at the moment that tax is equivalent to kicking Alaska's economy in the gut when we're already on the ground trying to tap out. I love Alaska and I don't want to have to move. If you can't empathize with that I understand. Who cares about 700,000 rednecks and eskimos up north who like to fish and hunt. They're probably all like sarah palin anyway haha. (she screwed our oil industry with crazy taxes and pretty much single handedly ensured AK industry didn't take part in or benefit from the US oil boom and is not a popular person around here) Like it or not. The US is a major oil producer now thanks to shale oil and technological improvements. High oil prices enabled us to go for harder to reach fields and the low price eliminates their feasibility. Like I said before, We produce as much oil as saudi arabia. Low prices will have a dramatic negative effect in many localized places like alaska. I understand if you don't empathize with us or care what happens to our economy but this kind of tax is not going to do alaska texas oklahoma idaho or north dakota any favors. [1] norway has 14 people per sq/km versus 0.46 people per sq/km in alaska. Even Mongolia has 4x AK's population density! Russia is 19x our density. https://www.google.com/webhp?sourceid=chrome-instant&ion=1&espv=2&ie=UTF-8#q=alaska%20population%20density https://www.google.com/webhp?sourceid=chrome-instant&ion=1&e... http://data.worldbank.org/indicator/EN.POP.DNST?order=wbapi_data_value_2014+wbapi_data_value+wbapi_data_value-last&sort=asc http://data.worldbank.org/indicator/EN.POP.DNST?order=wbapi_...

mozumder 11y ago

Yah Alaska really needs to figure out an economy that's not based on selling things they find in the ground. They need to learn from California and New York and other places where people have figures out how to make money off of ideas. You need smart people for that, though.

douche 11y ago
Eh, you kill the resource extraction industries, and all you're going to have left will be the homesteaders and some tourist trade. It'll look like the coast of Maine, at best. People aren't going to freeze to death up there if there isn't free land or easy money.
- gnarbarian 11y ago
  It'll be like Maine except we will have triple the cost of living. Anchorage will look like Detroit and the bush will look like rural mongolia 100 years ago. Maybe we'll even have to run the iditarod for real again to try and get vaccines/food/supplies to nome.
  - zardo 11y ago
    I grew up in the bush. Without support from the government, it would be amazing if they did that well. They don't have the culture and population to live off the land completely again. It would be the apocalypse out there.
gnarbarian 11y ago
Funny you should say that. I agree with some aspects of your complaint. But I place the blame on trendy tech companies and wonder why we don't see more investment/activity from tech firms here. Oil has been what makes money in AK for the last 35 years, We're not going to change overnight. There are attractive things for tech startups here. In Anchorage I have a gigabit home internet connection. I'm Sr. Programmer, I've been in the industry for 10 years, have a CS degree and I only make $70k per year. In other words we have a supply glut for programmers in Anchorage. I could make more in Cali, I'd have to leave my california illegal guns with my family first. I could also forget about hunting and fishing with my dad every weekend. I bet the the best backcountry snowboarding in california is a far cry from what I have an hour from my house. The real issue is I derive value from what I can do in my time off here that I can't do anywhere else in the world. There is talent up here that can be tapped for pennies on the dollar when compared to NY or SF. I'm sure there is even more talent who would like to move here because it's friggen awesome[1]. I wonder why we don't see more startup activity here, where you can actually operate a business and hire good people for less than six figures. Meanwhile the employees can rent apartments or even buy houses and have a mortgate with a 10 min bike commute to the office for around 1k per month. Sure seems silly seeing all those people pay out the ass for an apartment to commute two hours to an office the startup can barely afford with no parking. You would think a bunch of software engineers would be able to solve a simple network optimization problem by pushing resources to the edge of the graph but it seems like an office in a trendy location and insane taxes and rent is more important than a sustainable operating budget with work life balance. But of course us Alaskan's are the dumb ones. [1] http://imgur.com/a/llGid http://imgur.com/a/llGid

thrownaway2424 11y ago

30% is not a "holy shit" level of fuel tax. The federal fuel tax in 1993 was 18.4c per gallon (and remains at that level), while crude oil that year cost as little as $13/barrel. That's a 57% tax. Of course the real value of the federal fuel tax has monotonically declined through inflation, since it remains at a nominal 18.4c/gallon. In civilized countries the fuel tax is generally well over 100%. In Switzerland for example the tax is .75/liter, or about 120CHF (~$120) per barrel.

DrScump 11y ago
<The federal fuel tax in 1993 was 18.4c per gallon (and remains at that level), while crude oil that year cost as little as $13/barrel. That's a 57% tax.> Your math eludes me. National average gasoline price for 1993 was $1.10, yielding less than 17% tax.
- thrownaway2424 11y ago
  This article is using the price of crude oil as the denominator. In 1993 Brent Crude Oil varied between $13 and $20 per barrel.
  - DrScump 11y ago
    But the fuel tax figure you quoted was for gasoline, not crude. You were comparing apples to Orangesicles.
gnarbarian 11y ago
All except one of those "civilized" countries don't produce oil. They also all have much higher population densities where public transit makes sense and most people can't even afford to buy a car. That is not analogous to the situation here. There isn't a single European country with a population density so low it is close to Alaska [1]. Even Norway who is most similar to AK and is an oil producer has much smaller towns that individually are less spread out and are more easily served by public transit as a whole, norway has 30x the population density of AK[1]. In these civilized utopias most people can't even consider buying a car there due to artificially inflated costs from over regulation and taxes. I like a 4x4 truck that can get me to work in shitty weather. I like being able to afford to drive a boat around the ocean on the weekends and catch halibut. None of this pertains to my argument though and only serves to offer a bit of perspective. Regardless of consumer costs ($10 more is still a far cry from $110) What really matters here is the supply glut which causes a shortage of demand per unit of oil. This kills margins and rules out any new investment and developments in Alaska. These are the things that drive jobs. High margins fund the state government and new development. Low prices mean layoffs across the board before we even think about a huge tax stabbing into demand. In other words, that tax will retard oil's recovery by artificially suppressing national demand for oil. US consumers can withstand it no problem. But at the moment that tax is equivalent to kicking Alaska's economy in the gut when we're already on the ground trying to tap out. I love Alaska and I don't want to have to move. If you can't empathize with that I understand. Who cares about 700,000 rednecks and eskimos up north who like to fish and hunt. They're probably all like sarah palin anyway haha. (she screwed our oil industry with crazy taxes and pretty much single handedly ensured AK industry didn't take part in or benefit from the US oil boom and is not a popular person around here) Like it or not. The US is a major oil producer now thanks to shale oil and technological improvements. High oil prices enabled us to go for harder to reach fields and the low price eliminates their feasibility. Like I said before, We produce as much oil as saudi arabia. Low prices will have a dramatic negative effect in many localized places like alaska. I understand if you don't empathize with us or care what happens to our economy but this kind of tax is not going to do alaska texas oklahoma idaho or north dakota any favors. [1] norway has 14 people per sq/km versus 0.46 people per sq/km in alaska. Even Mongolia has 4x AK's population density! Russia is 19x our density. https://www.google.com/webhp?sourceid=chrome-instant&ion=1&espv=2&ie=UTF-8#q=alaska%20population%20density https://www.google.com/webhp?sourceid=chrome-instant&ion=1&e... http://data.worldbank.org/indicator/EN.POP.DNST?order=wbapi_data_value_2014+wbapi_data_value+wbapi_data_value-last&sort=asc http://data.worldbank.org/indicator/EN.POP.DNST?order=wbapi_...