Legislature(2007 - 2008)SENATE FINANCE 532

11/05/2007 02:30 PM FINANCE


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02:38:32 PM Start
02:39:30 PM SB2001
03:44:59 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Time Change --
+= SB2001 OIL & GAS TAX AMENDMENTS TELECONFERENCED
Heard & Held
Updated Agenda: Government Take - Defined
Government Take - As Applied in Alaska
Understanding Alaska's Current Production
Tax - How and Where Does the Cash Flow?
-- Testimony <Invitation Only> --
SENATE BILL NO. 2001                                                                                                          
                                                                                                                                
     "An Act  relating to the production  tax on oil and  gas and                                                               
     to conservation surcharges on oil;  relating to the issuance                                                               
     of  advisory   bulletins  and  the  disclosure   of  certain                                                               
     information relating  to the production tax  and the sharing                                                               
     between  agencies of  certain  information  relating to  the                                                               
     production  tax and  to  oil  and gas  or  gas only  leases;                                                               
     amending  the State  Personnel Act  to place  in the  exempt                                                               
     service  certain  state  oil  and  gas  auditors  and  their                                                               
     immediate  supervisors;  establishing  an oil  and  gas  tax                                                               
     credit  fund   and  authorizing  payment  from   that  fund;                                                               
     providing for  retroactive application of  certain statutory                                                               
     and regulatory provisions relating  to the production tax on                                                               
     oil  and  gas and  conservation  surcharges  on oil;  making                                                               
     conforming  amendments;  and   providing  for  an  effective                                                               
     date."                                                                                                                     
                                                                                                                                
2:39:30 PM                                                                                                                    
                                                                                                                                
Co-Chair  Stedman  emphasized the  complexity  of  the issue  and                                                               
observed the discussion revolves  around "government take" or how                                                               
the value of state resources  would be divided between the State,                                                               
federal  government,  explorers  and developers,  and  major  oil                                                               
companies  which harvest  those  assets.   He  observed that  the                                                               
State receives  revenue from the oil  industry primarily through:                                                               
royalty, property  tax, corporate income tax,  and production tax                                                               
(PPT).  He  stressed  the  need  to  consider  cash  flow,  lease                                                               
expenditures, base  tax, progressivity or surcharge  added to the                                                               
base tax, trigger  or speed that the  surcharge escalates, credit                                                               
that  stimulate PPT,  transitional  credits,  net operating  loss                                                               
carry  forwards,  credits   and  incentives,  tax  administration                                                               
(filing penalties,  tax auditing and windows),  and other issues.                                                               
He explained  that the focus would  be the tax value  citizens of                                                               
the State receive for their  resource, but emphasized the need to                                                               
keep an eye on the treasury.                                                                                                    
                                                                                                                                
2:48:10 PM                                                                                                                    
                                                                                                                                
PATRICK  GALVIN,  COMMISSIONER,  DEPARTMENT OF  REVENUE,  gave  a                                                               
presentation titled, "Senate Finance,  November 5, 2007" [copy on                                                               
file].                                                                                                                          
                                                                                                                                
2:48:49 PM                                                                                                                    
                                                                                                                                
Commission Galvin addressed Page 2:                                                                                             
                                                                                                                                
     Topics                                                                                                                     
       · Oil's importance to overall Alaska State revenue                                                                       
        · Producer Economics                                                                                                    
             o PPT                                                                                                              
             o CS SB 2001 (JUD)                                                                                                 
        · Government Take                                                                                                       
             o Alaska and Federal                                                                                               
             o Under PPT and CSSB 2001(JUD)                                                                                     
                                                                                                                                
Commissioner Galvin reiterated the  four revenue sources received                                                               
by  the  State through  taxes.    He highlighted  the  difference                                                               
between  royalty and  production tax  and explained  that royalty                                                               
tax is only applied to oil  and gas produced on state owned land.                                                               
Production tax  is applied  to all  oil and  gas produced  in the                                                               
state.                                                                                                                          
                                                                                                                                
2:49:38 PM                                                                                                                    
                                                                                                                                
Commissioner Galvin continued his presentation with Page 3:                                                                     
                                                                                                                                
     Sources of Alaska Government                                                                                               
     Revenue From Petroleum                                                                                                     
        o Royalty                                                                                                               
             o Based on the gross value at the "point of                                                                        
               production"                                                                                                      
             o Rate established in lease contract                                                                               
        o Property Tax                                                                                                          
             o Based on adjusted (for inflation) depreciated                                                                    
               investment costs and remaining useful life                                                                       
        o Production Tax                                                                                                        
             o Based on company's net cash flow per barrel of                                                                   
               production after costs and reinvestment                                                                          
        o State Income Tax                                                                                                      
             o After deduction of allowed costs, including                                                                      
               Royalties, Property Tax and Production Tax based                                                                 
               on apportioned worldwide income                                                                                  
                                                                                                                                
2:53:37 PM                                                                                                                    
                                                                                                                                
Senator  Dyson asked  if  there is  any  real difference  between                                                               
severance  tax   and  a   production  tax.   Commissioner  Galvin                                                               
responded  that  for  the  ease   of  dialog  the  terms  can  be                                                               
considered equivalent.                                                                                                          
                                                                                                                                
2:54:18 PM                                                                                                                    
                                                                                                                                
Senator Dyson  asked what  the Commissioner  meant by  "we figure                                                               
out   what  portion   would  be   applicable  to   Alaska",  when                                                               
calculating income tax.                                                                                                         
                                                                                                                                
2:54:40 PM                                                                                                                    
                                                                                                                                
Commissioner  Galvin   explained  that  the  percentage   of  the                                                               
corporation's  employees,  volume  and  value  of  production  in                                                               
Alaska and  a number of other  factors are used to  determine how                                                               
much  of  a corporation's  worldwide  profit  is attributable  to                                                               
their  Alaskan properties.   The  corporate tax  rate is  applied                                                               
against the result of those calculations.                                                                                       
                                                                                                                                
2:55:28 PM                                                                                                                    
                                                                                                                                
Senator Dyson asked  the Commissioner if the  process is outlined                                                               
in   statute.  Commissioner   Galvin   affirmed.  Senator   Dyson                                                               
summarized that the  State does the analysis  and determines what                                                               
portion of a corporation's worldwide  income can be attributed as                                                               
their share.  Commissioner Galvin agreed.                                                                                       
                                                                                                                                
2:55:57 PM                                                                                                                    
                                                                                                                                
Senator Dyson asked if companies  had appeal rights. Commissioner                                                               
Galvin observed  that companies  have the  same appeal  rights as                                                               
they would under any tax system.                                                                                                
                                                                                                                                
2:56:06 PM                                                                                                                    
                                                                                                                                
Senator Dyson  asked if  companies ever  counter the  findings of                                                               
the  State.  Commissioner  Galvin  explained that  the  share  is                                                               
calculated with easily determinable factors,  so there is not the                                                               
same level  of auditing that would  be found in the  more complex                                                               
production tax.                                                                                                                 
                                                                                                                                
2:56:57 PM                                                                                                                    
                                                                                                                                
Senator  Dyson questioned  if the  apportionment method  would be                                                               
sophisticated  enough  to pick  up  a  scenario  where all  of  a                                                               
company's  purchasing  and  administrative offices  were  outside                                                               
Alaska  with a  small  portion serving  their Alaskan  operation.                                                               
Commissioner  Galvin was  not able  to answer  the question,  but                                                               
promised  to  provide  information on  the  actual  apportionment                                                               
methods.                                                                                                                        
                                                                                                                                
2:57:58 PM                                                                                                                    
                                                                                                                                
Commissioner Galvin continued his presentation with Page 4;                                                                     
                                                                                                                                
     Total State Revenues                                                                                                       
     FY 2007 - $11.9 Billion                                                                                                    
     [Pie chart depicting the breakdown of revenues as follows:                                                                 
                                                                                                                                
          Federal (restricted)     26%                                                                                          
          Investment (restricted) 24%                                                                                           
          Oil (unrestricted)       36 %      ($4.3 Billion)                                                                     
          Oil (restricted)          5%       ($1.3 Billion)                                                                     
          Other (unrestricted)     4%                                                                                           
          Other (restricted)       4%                                                                                           
          Investment (restricted)  1%                                                                                           
                                                                                                                                
He explained  that state  funds are  comprised of  restricted and                                                               
unrestricted  revenue.  Restricted   revenue  is  designated  for                                                               
specific   purposes  and   is  not   available  for   legislative                                                               
appropriation.  Restricted   investment  is   made  up   of  both                                                               
permanent and non permanent fund money.                                                                                         
                                                                                                                                
2:59:19 PM                                                                                                                    
                                                                                                                                
Commissioner  Galvin  addressed  the  next slide  (page  5)  that                                                               
itemized the percentages of Unrestricted Petroleum Revenues:                                                                    
                                                                                                                                
     Royalty 35% ($1.6 billion)                                                                                                 
     Production Tax 47% (2.3 billion)                                                                                           
     State Corporate Income Tax 12% ($0.6 billion)                                                                              
     Property 5% (municipality)                                                                                                 
     Property 1% (state)                                                                                                        
                                                                                                                                
3:00:14 PM                                                                                                                    
                                                                                                                                
In response to  a question by Senator  Elton, Commissioner Galvin                                                               
noted the $4.6 billion did  not include the property tax portion,                                                               
which goes to municipalities.                                                                                                   
                                                                                                                                
Senator  Huggins  asked  for  clarification  regarding  the  $300                                                               
million  in  property  tax. Commissioner  Galvin  explained  that                                                               
corporate income  tax brings in  about $60 million,  $300 million                                                               
represents  the  municipal  portion  and  the  state  portion  is                                                               
approximately $50 million.                                                                                                      
                                                                                                                                
3:01:40 PM                                                                                                                    
                                                                                                                                
Commissioner Galvin addressed the pie chart on Page 6:                                                                          
                                                                                                                                
     General Fund Unrestricted Revenues                                                                                         
     FY 2007 - $4.9 Billion                                                                                                     
                                                                                                                                
     The breakdown is as follows:                                                                                               
     Oil 88% ($4.3 billion)                                                                                                     
     Other 10%                                                                                                                  
     Investment 2%                                                                                                              
                                                                                                                                
3:02:08 PM                                                                                                                    
                                                                                                                                
Co-Chair  Steadman  pointed out  that  the  88% or  $4.3  billion                                                               
varies from year to year depending  on volume and price, but 80 -                                                               
90 percent of state comes from the oil industry.                                                                                
                                                                                                                                
3:02:38 PM                                                                                                                    
                                                                                                                                
Senator Elton  clarified that the  percentage does  not represent                                                               
the  amount  of  unrestricted  income  that  comes  in  from  the                                                               
Permanent  Fund. Commissioner  Galvin agreed  and clarified  that                                                               
the discussions only pertain to  the portion that is available on                                                               
an annual basis.                                                                                                                
                                                                                                                                
3:03:13 PM                                                                                                                    
                                                                                                                                
BOB  GEORGE,  CONSULTANT,  GAFFNEY, CLINE  AND  ASSOCIATES  INC.,                                                               
provided information. He addressed Page 7:                                                                                      
                                                                                                                                
 FY 2009 Producer Share of Revenues Under PPT                                                                                   
                                                                                                                                
Mr.  George explained  that the  charts reflect  calculations for                                                               
fiscal  year 2009  because it  is  the first  full year,  without                                                               
transitional  impacts  that  forecasts  would  be  available.  He                                                               
reviewed the chart.                                                                                                             
                                                                                                                                
He pointed  out that the percentage  column represents individual                                                               
numbers as a percentage of the  sales revenue.  He clarified that                                                               
this  is different  from the  percentage on  profits. He  further                                                               
highlighted  the amount  under the  Trans-Alaska Pipeline  System                                                               
(TAPS).   He explained that  the number represents  actual costs,                                                               
but emphasized  that there is  a higher cost allowance  amount of                                                               
approximately $5  per barrel under  PPT.  The  presented scenario                                                               
the Producer income is $20.02 per barrel.                                                                                       
                                                                                                                                
3:09:47 PM                                                                                                                    
                                                                                                                                
Mr. George moved on  to Page 10 in order to  show a comparison of                                                               
PPT and CSSB 2001(JUD).                                                                                                         
                                                                                                                                
3:09:58 PM                                                                                                                    
                                                                                                                                
Senator Elton  asked for  clarification of  the state  income tax                                                               
percentages.  He observed  that the  producer revenues  under PTT                                                               
shows state income tax at $763  million or 4% income tax, but the                                                               
chart on  page 5 seems to  suggest that state income  tax is 12%.                                                               
Commissioner Galvin explained that the  12% is all state revenue;                                                               
the four percent  of the sales revenue. The  pie chart represents                                                               
total  state  corporate  income  tax  revenue.    The  pie  chart                                                               
compares state income tax as  a percentage of state revenues. The                                                               
4% represents the  sales tax amount as a percentage  of oil sales                                                               
for the company.                                                                                                                
                                                                                                                                
3:11:34 PM                                                                                                                    
                                                                                                                                
Co-Chair Hoffman  asked what  the production  tax would  bring in                                                               
under ACES  (HB 2001)  if the  oil prices  were at  $66.30 Alaska                                                               
North Slope  (ANS). Mr. George said  he did not have  the numbers                                                               
available, but promised to provide them.                                                                                        
                                                                                                                                
Senator Steadman  noted that the  Governor's bill (ACES)  was not                                                               
before them and  asked if the Commissioner could  get the numbers                                                               
for comparison  purposes at a  later date. The  Commissioner said                                                               
he would accommodate the request.                                                                                               
                                                                                                                                
3:13:15 PM                                                                                                                    
                                                                                                                                
Mr.  George   noted  that  the  primary   difference  under  CSSB                                                               
2001(JUD) is  that the base rate  of the production tax  is moved                                                               
from 22.5%  to 25% and  progressivity starts  at a cash  flow per                                                               
barrel of $30 rather than $40  under PPT. He further outlined the                                                               
changes as follows: progressivity is  4% on the dollar per barrel                                                               
when the net  cash flow exceeds $30 as opposed  to .2% under PPT.                                                               
The  final change  was the  elimination  of TIE  credits in  CSSB                                                               
2001(JUD).                                                                                                                      
                                                                                                                                
3:14:11 PM                                                                                                                    
                                                                                                                                
Co-Chair  Steadman  asked Mr.  George  to  discuss page  13.  Mr.                                                               
George  explained that  the numbers  are the  same from  previous                                                               
tables (of  ANS at $66.30  per barrel), but  specifically focuses                                                               
on the  government take and  the Alaska share. He  explained that                                                               
the Net  cash flow number  equals the ultimate sales  price, less                                                               
costs.  He further  pointed out  that  under a  PPT scenario  the                                                               
total government take (both federal  (20%) and state (38%)) would                                                               
be 58%,  whereas the producers  would receive  42%.  He  noted an                                                               
error in  the chart: Production  Tax should say Property  Tax and                                                               
Petroleum Tax should  say Production Tax. He itemized  the 38% to                                                               
state  government noting  the percentages  for each  of the  four                                                               
taxes.                                                                                                                          
                                                                                                                                
     Royalty   16%                                                                                                              
     Propery Tax    2%                                                                                                          
     Production Tax 13%                                                                                                         
     State Income Tax 6%                                                                                                        
                                                                                                                                
3:16:40 PM                                                                                                                    
                                                                                                                                
Co-Chair Steadman directed  Mr. George to skip  the chart because                                                               
the bill (CSSB 2001 JUD) was not before the committee.                                                                          
                                                                                                                                
3:17:00 PM                                                                                                                    
                                                                                                                                
Mr.  George  referred  to  page   15  noting  the  comparison  of                                                               
government  take under  PPT  and the  Senate  Judiciary CS  (CSSB                                                               
2001(JUD)).  Co-Chair Stedman  asked how  this compared  to other                                                               
basins  around  the  world when  considering  the  share  between                                                               
state, federal government and producer.                                                                                         
                                                                                                                                
3:17:46 PM                                                                                                                    
                                                                                                                                
Mr. George named several places in the world with percentages.                                                                  
In the UK  sector of the North  Sea the tax rate  on older fields                                                               
pay 75%  of profits with newer  fields paying 50% of  profit.  In                                                               
Norway   the  state   take  is   78%.   Co-Chair  Stedman   asked                                                               
specifically about  Alberta. Mr. George  did not know  the latest                                                               
figures since the implementation of  changes in Alberta. Prior to                                                               
current changes  in Alberta, the  government take was in  the mid                                                               
40 percent range.                                                                                                               
                                                                                                                                
3:18:41 PM                                                                                                                    
                                                                                                                                
Senator  Huggins asked  the  Commissioner what  the  goal of  the                                                               
Administration  was   regarding  government   take.  Commissioner                                                               
Galvin clarified that the Administration  looked primarily at the                                                               
balance of  Alaska investment opportunities  to ensure  the rates                                                               
set  would not  impinge new  investment, rather  than a  specific                                                               
government take number.   With regards to the share  to the state                                                               
the commissioner  explained that though  it was secondary  to the                                                               
investment concern,  the Administration  wanted to make  sure the                                                               
percentage of  share was not  outside the norm.   He specifically                                                               
noted  that based  on research  of other  countries with  similar                                                               
variables the  rate could be  between the  UK rate and  Norway of                                                               
50% -  75%.   Mr. George  explained that in  the UK  older fields                                                               
have  two taxes  that  apply  resulting in  an  aggregate of  75%                                                               
government share.  This differs from  newer fields that  pay only                                                               
one tax at  50%.  He reiterated that with  Norway's tax structure                                                               
the government tax is 78%.                                                                                                      
                                                                                                                                
3:20:54 PM                                                                                                                    
                                                                                                                                
Senator  Huggins  questioned  the Commissioner  about  the  gross                                                               
floor and opined that is was  a dysfunctional element of the ACES                                                               
bill.                                                                                                                           
                                                                                                                                
3:21:32 PM                                                                                                                    
                                                                                                                                
Commissioner  Galvin countered  that the  Administration believed                                                               
the gross  floor had merit.  He went on  to say that  rather than                                                               
relying  on taking  more  at  the high  end  and  saving for  the                                                               
future, the gross  floor ensured a revenue stream  at low prices.                                                               
He acknowledged that  the industry put forth an  opinion that the                                                               
gross floor  would impinge on  their investment  decision making,                                                               
but maintained  that the Administration believed  the gross floor                                                               
struck the appropriate balance.                                                                                                 
                                                                                                                                
3:23:00 PM                                                                                                                    
                                                                                                                                
Senator Huggins  maintained his point  that no one, thus  far had                                                               
been advocating for the gross floor.                                                                                            
                                                                                                                                
3:23:14 PM                                                                                                                    
                                                                                                                                
Senator  Thomas put  forth  that it  may be  helpful  to look  at                                                               
historical years  pricing index and  compare the ELF  system, PPT                                                               
and  ACES  systems,  when establishing  estimates.  He  expressed                                                               
skepticism regarding prices remaining high.                                                                                     
                                                                                                                                
3:24:45 PM                                                                                                                    
                                                                                                                                
Commissioner  Galvin  agreed  with  Senator  Thomas  and  further                                                               
pointed out that  the hope is that the tax  structure would be in                                                               
place long term.                                                                                                                
                                                                                                                                
3:25:41 PM                                                                                                                    
                                                                                                                                
Senator Thomas noted a concern  regarding the frequent use of the                                                               
current high oil prices as  a standard for future projections. He                                                               
felt a historical perspective created a more realistic picture.                                                                 
                                                                                                                                
3:26:13 PM                                                                                                                    
                                                                                                                                
Mr.  George said  page 17  describes the  difference between  the                                                               
existing  PPT  system  and  the CSSB  2001(JUD).    He  discussed                                                               
specifically  the base  and the  credits  and deductions  allowed                                                               
under PPT that no longer exist in the CSSB 2001(JUD).                                                                           
                                                                                                                                
3:27:32 PM                                                                                                                    
                                                                                                                                
Co-Chair Stedman noted the importance  of viewing each component;                                                               
TAPS  tariff,  marine  transportation,  credits,  and  the  total                                                               
effect on the tax. Commissioner Galvin concurred.                                                                               
                                                                                                                                
3:28:24 PM                                                                                                                    
                                                                                                                                
Mr.  George discussed  details of  the  chart: FY  2009 Share  of                                                               
Sales  Revenue.    He  observed   that  costs  remain  relatively                                                               
constant  and  become a  smaller  portion  of the  overall  sales                                                               
revenue.   He  further  pointed  out that  as  the  price of  oil                                                               
increases  so does  government take  and the  percentage for  the                                                               
producer.                                                                                                                       
                                                                                                                                
3:30:00 PM                                                                                                                    
                                                                                                                                
Mr. George addressed  the next slide, Share of  profit, and noted                                                               
that the chart strips out  costs and illustrates profit under the                                                               
different price ranges.                                                                                                         
                                                                                                                                
3:30:47 PM                                                                                                                    
                                                                                                                                
Co-Chair Stedman asked the Commissioner  to reflect the same data                                                               
under  PPT and  ACES structure,  noting that  it would  provide a                                                               
better reference  point. The Commissioner  agreed to  provide the                                                               
information.                                                                                                                    
                                                                                                                                
Co-Chair  Stedman discussed  the  progressivity impact,  shipping                                                               
and  tariffs, as  well  as other  variables  outside the  general                                                               
arena.  He emphasized  the importance  of  deliberation on  these                                                               
components when the issue of progressivity is discussed.                                                                        
                                                                                                                                
3:32:30 PM                                                                                                                    
                                                                                                                                
Senator  Elton   asked  the  Commissioner  if   the  Governor  is                                                               
comfortable with  the Senate Judiciary version  (CSSB 2001(JUD)).                                                               
Commissioner   Galvin  observed   that   the  Administration   is                                                               
comfortable with either version.                                                                                                
                                                                                                                                
3:33:52 PM                                                                                                                    
                                                                                                                                
Senator Huggins  said he was  interested in what elements  of the                                                               
Transitional  Investment  Credits  (TIE)  the  Administration  is                                                               
supportive  of and  what  questions  remain. Commissioner  Galvin                                                               
said  the Administration's  position is  that TIE  credits should                                                               
not be allowed forward from the effective date of the bill.                                                                     
                                                                                                                                
3:35:00 PM                                                                                                                    
                                                                                                                                
Co-Chair  Stedman  noted that  the  Committee  would review  each                                                               
individual credit  and the  financial impact  they would  have on                                                               
the treasury.   The Committee  would also address impact  with an                                                               
income statement approach to PPT.                                                                                               
                                                                                                                                
3:36:05 PM                                                                                                                    
                                                                                                                                
Co-Chair  Hoffman   emphasized  that   there  is   a  significant                                                               
difference in  Progressivity between the Governor's  bill and the                                                               
Senate  Judiciary version.   He  asked what  the Administration's                                                               
position was on progressivity.                                                                                                  
                                                                                                                                
3:37:20 PM                                                                                                                    
                                                                                                                                
Commissioner  Galvin  observed  that  the  original  bill  had  a                                                               
combination of  gross tax floor to  protect the State at  the low                                                               
end and  a more modest  two percent progressivity  slope starting                                                               
at $30  per barrel.   He said  the Administration  recognized the                                                               
Legislature was  taking a different  direction, with  without the                                                               
gross floor and a higher  four percent progressivity, to save the                                                               
amount when  prices are low.  The Administration  was comfortable                                                               
with a four percent progressivity in lieu of a floor.                                                                           
                                                                                                                                
3:38:35 PM                                                                                                                    
                                                                                                                                
Co-Chair Hoffman cited a revenue  comparison having a gross floor                                                               
with  low progressivity  and a  higher progressivity  without the                                                               
floor.   He emphasized the significant  dollar difference between                                                               
the  two.  The  price  difference without  the  floor  may  range                                                               
between   $100  and   $200   million.   The  difference   between                                                               
progressivity  at $100,  PPT and  what  was passed  by the  House                                                               
would be $3 billion dollars.                                                                                                    
                                                                                                                                
3:39:31 PM                                                                                                                    
                                                                                                                                
Commissioner Galvin pointed  out that the original  intent of the                                                               
floor  was to  protect the  State when  oil prices  are low.   He                                                               
acknowledged  that  the  progressivity   feature  in  the  Senate                                                               
Judiciary version does bring in more  than ACES, but said that it                                                               
becomes a matter of a  commitment to saving. He further commented                                                               
that  the   Legislature  has   chosen  to   go  with   a  steeper                                                               
progressivity and  no floor, but  is committed to saving  for the                                                               
future.  The  Commissioner  stated that  the  Administration  was                                                               
comfortable  with  the  different version  on  the  progressivity                                                               
piece.                                                                                                                          
                                                                                                                                
3:40:55 PM                                                                                                                    
                                                                                                                                
Co-Chair  Hoffman  reiterated   and  emphasized  the  significant                                                               
dollar difference at  high oil prices. At a $100  per barrel, the                                                               
difference is $3 billion dollars, which is staggering.                                                                          
                                                                                                                                
3:41:29 PM                                                                                                                    
                                                                                                                                
Commissioner  Galvin clarified  that when  evaluating metrics  of                                                               
ACES in  July, August and  September, the price  of oil was  in a                                                               
$70  range and  considered  at historic  levels.  He stated  that                                                               
calculations were  based on  that number  and attempting  to base                                                               
figures on  a $100  price range would  have been  unrealistic. He                                                               
voiced the concerns of Senator  Thomas, that focusing only on the                                                               
returns during  $100 price range  creates an  unrealistic picture                                                               
for the future.                                                                                                                 
                                                                                                                                
3:43:20 PM                                                                                                                    
                                                                                                                                
Co-Chair Stedman explained that  the previous Administration when                                                               
creating PPT  looked at prices of  oil in the $20-$60  range. The                                                               
current Administration  created ACES  looking at a  $70-$90 price                                                               
range. He  said that he intends  to look at a  structure based on                                                               
prices between  $50 and  $150 so  that there will  be no  need to                                                               
revisit the tax issue.                                                                                                          
                                                                                                                                
3:44:41 PM                                                                                                                    
                                                                                                                                
CS  HB  2001   (FIN)  am  was  HELD  in   Committee  for  further                                                               
consideration.                                                                                                                  

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