Juneau, Alaska (KINY) The State House Natural Resources Committee voted along party lines, 5-4, to approve a bill that would increase the minimum production oil tax from four to seven percent Monday.
Industry officials said the change would harm north slope production, which has increased in the past two years by about 2 percent each year.
Anchorage State representative Geran Tarr (D) introduced bill that would increase the oil production tax on state leases north of the Arctic Circle.
President of the Alaska Oil and Gas Association Cara Morriety said this will hurt production. "When you increase taxes you increase cost. When you increase cost you decrease your competitiveness. It will not help companies go lobby for projects in Alaska versus projects around the nation or around the globe."
Officials from Exxon-Mobil and ConocoPhillips told the committee that charging them another $225-million per year in taxes could stall a recent increase in industry investment.
The bill's co-sponsor, Anchorage Representative Andy Josephson, said at the current price range between $50 and $70 per barrel, oil companies are making more profit than the $2 per barrel the state collects from the production tax.
Last summer, the legislature eliminated tax credits to oil companies -- about $200 million per year.