Legislature(1999 - 2000)
01/11/2000 09:15 AM Senate FIN
| Audio | Topic |
|---|
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
GENERAL SUBJECT(S):
Revenue Projections - Overview of oil revenue
And other revenue sources for FY'00 and FY'01
Commissioner Wilson Condon, Department of Revenue
Larry Persily, Deputy Commissioner, Department of Revenue
Chuck Logsdon, Chief Petroleum Economist, Department of Revenue
The following overview was taken in log note format. Tapes and
handouts will be on file with the Senate Finance Committee through the
21st Legislative Session, contact 465-4935. After the 21st
Legislative session they will be available through the Legislative
Library at 465-3808.
Time Meeting Convened: Approximately 9:15 am
Tape(s): SFC-00 #1 Side A and Side B
PRESENT:
Senator Adams
Senator Parnell
Senator P. Kelly
Senator Torgerson
Senator Green
Senator Donley
Senator Phillips
Senator Leman
Senator Wilken
ALSO PRESENT:
SENATOR DRUE PEARCE
SENATOR KIM ELTON
REPRESENATIVE JERRY SANDERS
WILSON CONDON, COMMISSIONER, DEPARTMENT OF REVENUE
LARRY PERSILY, DEPUTY COMMISSIONER, DEPARTMENT OF REVENUE
CHUCK LOGSDON, CHIEF PETROLEUM ECONOMIST, DEPARTMENT OF REVENUE
LOG
SPEAKER
DISCUSSION
Tape SF00 - #1 Side A
0
CO-CHAIR PARNELL
Introduction (small tape delay)
"What a difference a year makes."
An advisory vote was held Sept. 14, 1999,
asking voters if they wanted to use a
portion of permanent fund earnings to
finance government. "They sent a strong,
loud message that that's not going to
happen."
The Committee will be spending a lot of
time on the budget this session. The
governor has proposed an operating budget
that increases spending by approximately
$120 million over the current fiscal year
plus increases to labor contracts still in
negotiation. The total could be closer to a
$200 million increase. "To me that's cause
for concern."
From what I've been hearing "in the lunch
rooms and neighborhoods of Southcentral
Alaska," a huge budget increase has
generated more public cynicism and even
contempt as to whether or not the governor
and the legislature has gotten the message.
We're going to continue to work toward
reducing government spending and we are
going to do it in a way that focuses on
results for that spending.
Our budget subcommittees are going to begin
this week on each agency budget.
In November I sent a memo to the budget
subcommittee chairs asking them to begin
working with the departments on writing
measures to allow us to determine whether
the agencies are accomplishing the missions
we are funding.
I anticipate a more aggressive schedule
this year establish missions and measures
so that we get to the budget numbers much
sooner.
Allocations for each agency will be
released sooner than last year. The offices
have had more time to work on missions and
measures during the interim.
59
Introduction of Senate Finance Committee
Secretary staff: Mindy Rowland, Senate
Finance Committee Secretary; Jamie Foley,
Asst. Senate Finance Committee Secretary;
Bree Simpson, Senate Finance Committee
Page.
68
In every budget we deal with revenues and
spending. Today we'll begin with revenue.
77
SENATOR DONLEY
Last year we were presented with
approximately $100 million in new spending
by the governor and we tried to work toward
our target of a $40 million reduction to
help close the fiscal gap. We are in a
similar situation this year.
While the House was successful at reducing
the governor's request, but only by
eliminating revenue sharing and municipal
assistance. The overall operating budget
for state agencies was actually increased.
That left the Senate Finance Committee in a
difficult situation trying to reduce the
operating budget. It is unwise to simply
eliminate municipal assistance since that
is a direct impact upon local property
taxes and small communities across the
state where this assistance may be their
only source of revenue.
I was pleased with the budget the Senate
Finance Committee produced. It restored
some of the revenue sharing and municipal
assistance and still made reductions in
state spending consistent with the
Majority's five-year budget plan.
Unfortunately, after the Conference
Committee finished, the final version
didn't look like that.
Co-Chair Torgerson and I had an
understanding at the beginning of the
capital budget discussions last year that
Alaska Industrial Development and Export
Authority (AIDEA) monies would be counted
as general funds. However, in the budget
submitted from the House, the approximately
$19 million AIDEA funds were not treated as
general funds "which I don't think is true.
I don't think that's an honest way to
budget because that's real dollars that
could be used to reduce the fiscal gap."
The House then increased spending by $19
million, which created a bigger problem.
Therefore, I think we should reach an
agreement now with the other body as to
what funds will be treated as general funds
and which will not. The discrepancy last
year jeopardized our ability to continue
the five-year plan, meet out targets and be
successful in reducing overall state
spending, which is an important component
in closing the fiscal gap.
We are again faced with another increase
from the executive branch at a time where
we need to be working toward reductions and
closing the fiscal gap.
I'm hoping there will be a different sense
from the other body. Maybe we should reach
out to them early so they don't cut out
municipal assistance and increase the state
operating budget.
140
SENATOR ADAMS
I don't think we should judge the requested
increase of $100 million until we have a
chance to look at it. We should look at the
budget program by program, item by item and
the affects on Alaskans.
In looking at last year's budget, we see
that sometimes in making these drastic
cuts, lawsuits arise because programs such
as public safety and rural and urban
schools are not adequately funded. "We
should fund what is rightly so in the
constitution."
I realize we are faced with an approximate
$100 million deficit but we should look at
those programs and services that we need to
fund and that help jobs and families in the
State Of Alaska.
In the past, instead of creating new jobs,
we have transferred jobs from Juneau and
rural Alaska into Anchorage. I think that
is wrong. If you want to cut, let's cut
those 1000 state jobs that have increased
in the last five years before reducing the
governor's proposed budget.
170
SENATOR P. KELLY
We are in the final year of the five-year
plan and I think we should carry out the
plan according to the rules laid out five
years ago. However, we should not include
the capital budget in the spending
reduction plan although we do need to be
disciplined in the capital budget.
The public wants us to cut government, not
cut growth in the state. There is a
difference between increasing bureaucracy
and addressing building needs.
For the state to grow, we need to continue
to build roads and bridges, fix schools
etc.
If capital needs aren't met, we end up
doing bond debts later, which increases the
operating budget.
I recommend that we look at the capital and
operating budgets separate.
We spend almost the entire capital budget
matching federal funds. The state is
growing only as the federal government
wants rather than letting the state decide
how the state will grow.
203
CO-CHAIR PARNELL
Introduce Senator Drue Pearce, Senator Kim
Elton and Representative Jerry Sanders
220
CHUCK LOGSDON,
CHIEF PETROLEUM
ECONOMIST, DIVISION
OF OIL AND GAS
AUDIT, DEPARTMENT
OF REVENUE
Handout: Alaska State Revenue Outlook
Department of Revenue Presentation to
Senate Finance January 11, 2000
And
Fall 1999 Revenue Sources Book, Alaska
Department of Revenue, Oil and Gas Audit
Division, December 8, 1999
227
Department of Revenue has restructured the
revenue sources book to try to refocus and
look at the total revenue picture.
234
Handout: The Total Revenue Picture
Our revenue picture has dramatically
changed with the reduction of oil
production on the North Slope. Other
sources of revenue have become more
important in the total revenue picture in
providing the money that the state has to
spend.
Investment revenues today is the largest
source on income followed by federal
revenue and then oil revenues.
Handout: The Total Revenue Picture FY99
(pie chart)
The white-colored wedges are restricted
revenue (Investment Earnings Restricted,
41%, $2.267 billion; NoTUFF Restricted,
36%, $2.350 billion and Oil Restricted, 3%,
$0.208 billion.)
The green-colored wedges are the
unrestricted revenue (Oil Unrestricted,
14%, $0.913 billion; NoTUFF Unrestricted,
5%, $0.332 billion and Investment Earnings
Unrestricted 1%, $0.047 billion.)
In typical presentations on the revenue
situation, the focus has been on the
unrestricted portions of the revenue
because that is what effectively represents
the "general purpose money" that is
available for appropriation.
Note that the restricted revenue is
seventy-seven percent of the monies coming
in. Of that, the investment earnings is the
biggest chunk of restricted revenues. The
biggest portion of the restricted
investment earnings revenue is the
permanent fund.
252
Handout: Total State Revenue, Actual FY1999
and Projected 2000-2001 (table)
We've broken the "unrestricted revenue"
amounts into "Oil Revenue", "Non-Oil
Revenue" and Investment Earnings". The
investment earnings in this case are those
that are earned on general fund balances
that the Department of Revenue manages.
We'll get a nice bump up because oil
revenues will be up from last year.
We're going to get a nice "bump up" on the
1999 general purpose revenues mostly
because oil revenues are going to be a lot
higher this year. So far in this fiscal
year, we've averaged almost $21 per barrel.
In FY99 oil prices averaged just over $12
per barrel.
262
Note that year 2000 restricted money has a
big drop in investment earnings. This is
based on the permanent fund earnings and
there was a big drop in the investment
market in the third quarter of 1999. I
expect that the permanent fund will
probably revise those numbers upwards.
271
CO-CHAIR PARNELL
Does the "Unrestricted: Non-Oil Revenue"
include corporation general income tax?
MR. LOGSDON
Correct.
CO-CHAIR PARNELL
The projected corporation general income
tax shown on page 17 of the source book
predicts reduced revenue of about one
million dollars a year. Is that an economic
indicator that we should be concerned
about? Or is something else going on?
280
MR. LOGSDON
I can't give you an indication of whether
that's driven by economic activity.
LARRY PERSILY,
DEPUTY
COMMISSIONER,
DEPARTMENT OF
REVENUE
Some is based on economic activity and also
the increased use of "S" corporations,
which do not pay corporate income tax in
Alaska.
CO-CHAIR PARNELL
I was concerned that was an indicator of a
declining economy.
MR. PERSILY
I believe it is more a matter of "S"
corporations rather than taxpaying "C"
corporations.
CO-CHAIR PARNELL
But aren't the largest taxpaying
corporations the larger corporations that
don't qualify for "S" status.
MR. PERSILY
They are and that is why there is just a
small decrease.
CO-CHAIR PARNELL
Thank you.
MR. LOGSDON
The department is going to continue to
refine our forecast document and we have
been cooperating with the Division of
Legislative Finance and Office of
Management and Budget and the Division of
Finance to make our revenue estimates and
projections more understandable and
reconcilable. We have a number of agencies
that account for state revenues.
I won't address the permanent fund since
the corporation will be making a separate
presentation to the Committee. The Office
of Management and Budget can tell you about
the federal revenue situation.
I'm going to therefore focus on oil
revenues, which continues to provide over
70 percent of our general-purpose spendable
money.
Handout: Alaska Oil Prices
I guess the real question on everyone's
mind is how high will Alaska's oil prices
go and how long will they stay above $20
per barrel.
307
In December 1999 the average was $24.63 per
barrel. That is about the highest monthly
average since the Persian Gulf War.
Oil prices are very healthy right now and
there are fundamental reasons for that,
mostly because OPEC dropped production and
Non-OPEC production has not increases. We
also have a healthy economy and it is
winter.
Watch OPEC because they are key. ANS has
averaged nearly $21 per barrel so far this
year.
Handout: ANS Spot Price (West Coast
Delivery)
If you look at the track record of oil
prices, you'll notice extreme volatility.
There are lots of peaks and valleys since
January 1986. In fact, we've just come out
of one of the deepest valleys since ANS
started production. Volatility is what oil
prices are all about.
Handout: ANS Spot Prices and 60-month
Moving Average (West Coast Delivery)
If you look at the data in a different way,
you'll see there is a tendency for the
average to be relatively stable. The bold
line shown on the graph is a calculated 60-
month moving average of oil prices.
Handout: ANS West Coast Price and Futures
Market for ANS
These are futures market prices for early
October and early December. Whenever the
price of oil is below the long-run
relatively flat curve, the futures contract
for a delivery scheduled a few months into
the future will approach the long-run
average.
In the case of October 1999 futures, when
cash prices were below the long-term
averages, the futures contract prices go up
and begin to approach the long-term
average.
In the case of the December 1999 futures
curve, where prices are considerably above
the $17 per barrel number, oil could only
be sold for about $17 per barrel instead of
the current cash price.
The point is that the futures market tends
to look at the world with a longer
perspective than the next month's estimated
price. The question is how fast the price
will approach the long-run average.
Handout: Historical Futures Market Prices
for ANS
This chart illustrates that the futures
market follows the same pattern for several
years. The belief of experts is that if oil
prices rise above $17 per barrel, the
prices will go down again at one point. The
only question is, when and how fast.
358
Handout: Futures Based Market Prices for
ANS
This illustrates the point that even when
oil prices in December 1999 were two
dollars per barrel above October 1999
prices; the futures market averages the
same long-range price of $17 per barrel.
Handout: Cumulative Average ANS Oil Price,
Moving Average and Confidence Intervals
This is the cumulative average of ANS oil
price that illustrates several different
perspectives. We have already looked at a
five-year average, and this chart compares
the findings to twelve, twenty-four,
thirty-six and forty-eight month averages.
Handout: ANS Oil Prices - The Department of
Revenue Forecast (Long Term)
The department has begun to take a longer-
term viewpoint of five and ten years from
now.
Unless there is major structural change in
the world economy, oil prices should
average $17 to $18 per barrel.
The fundamental reason for this is that
over time, market forces will continue to
provide production and consumption
incentives that tend to guide oil prices to
that average.
OPEC is currently pulling oil off the
market to encourage higher prices and as
prices rise, they will begin to put more
oil on the market. Non-OPEC producers will
explore and develop more oil to add to the
market.
Consumers react to higher oil prices as
well by reducing consumption.
Higher fuel prices can be a drag on the
community. Higher oil prices mean higher
energy prices.
400
SENATOR P. KELLY
When you refer to "long-term" do you mean
five years?
402
MR. LOGSDON
Yes. Although I've actually used ten years
to calculate some of the projections.
SENATOR P. KELLY
Last year the Committee heard information
saying that the market forces were
conspiring to keep prices down. This
handout states that market forces will
continue to provide production and
consumption incentives to bolster price
higher.
CO-CHAIR PARNELL
The earlier information was provided to us
by Cambridge Energy.
SENATOR P. KELLY
That information seems opposite from what
you are saying today.
412
MR. LOGSDON
The path to that average is not a smooth
one. Oil prices over one or two years can
be quite low or quite high, but over time,
the highs and lows tend to be offset and
prices move toward that average. Because of
the possibility of a major structural
change in the way the world economy
consumes energy, a twenty-year average is
not practical.
424
SENATOR P. KELLY
Are you saying that your view and Cambridge
Energy's is the same.
MR. LOGSDON
I don't know Cambridge Energy's long-term
view. I hope the large multi-national
corporations will be in "for the long haul"
and invest in projects that are economic
with oil prices of $17 to $18 per barrel.
430
SENATOR P. KELLY
It seemed that the information given to us
last year reflected a long-term view.
However, the conclusion was different from
your long-term view in that they projected
lower prices.
434
CO-CHAIR TORGERSON
Cambridge Energy said that the price would
go up to $20 per barrel and then drop back
down to $15 to $16 due to overproduction.
Do any other analysts agree with your
assessment of prices of $17 to $18?
439
MR. LOGSDON
In looking back at the futures market, our
view has been consistent with the market
view.
The $17 to $18 figure is based strictly on
a historical evaluation. However, short of
a major structural change, whether it be a
policy to address global warming through
major fuel taxes to encourage the use of
other fuels, the track record demonstrates
that if you hang in long enough view oil
prices will average $17 to $18. Doesn't
mean it won't be painful at certain points
because oil prices are volatile.
452
CO-CHAIR TORGERSON
I hope you're right.
Does the BP/Arco merger have any bearing on
your price structures?
MR. LOGSDON
We do not believe so.
CO-CHAIR TORGERSON
The merger is not reflected in these
projections?
MR. LOGSDON
Correct.
455
SENATOR LEMAN
It appears to be listed as nominal dollars,
is that true of your projection?
MR. LOGSDON
Yes.
SENATOR LEMAN
458
MR. LOGSDON
Handout: ANS Destination Price, Actual vs.
Forecast
This shows the actual prices and some of
our prior forecasts.
In the past we had been guilty of
extrapolation in our projections that
prices would continue to rise dramatically.
This was based on the belief that because
there is a limited supply of oil, prices
would continue to go up.
Our latest forecast shows our belief that
over the long term, oil prices will remain
relatively flat.
468
Handout: Alaskan Oil Production
ANS production in calendar year 1999
averaged 1.077 million barrels per day.
This is based on preliminary data from
Alyeska.
That is about 25 percent or .0358 million
barrels per day less than what was produced
five years ago.
We are currently projecting North Slope
projections for FY00 at 1.055 million
barrels per day. However, there have been a
few production disruptions and we don't yet
know the effect that will have on the total
production.
477
Handout: FY 2000 ANS Production
Year to date we are averaging 1.03 million
barrels per day. We are behind our
projections.
There will be about three more months of
cold weather on the North Slope that
enhances the performance of the oil fields.
We want cold weather, but not too cold.
They don't send people out in 50 degrees
below zero chill factor for safety reasons.
486
Handout: Alaskan Oil Production Forecast
We are expecting Prudoe Bay, the "mother
lode," to decline over time by 30-40
thousand barrels per day. Other fields,
Kuparuk, Point McIntyre and Endicott, will
decline an average of 15-25 thousand
barrels per day. Fortunately new fields,
Alpine, Prudoe and Kuparuk Satellites and
North Star will offset the declines over
the next five years.
We expect oil production to plateau at just
over one million barrels per day through
2006.
496
What are the consequences of these oil
price and production estimates in terms of
revenue consequences?
Handout: State Of Alaska Historical Sources
of Revenue
CBR fund revenues decline slightly over
time and reflects reduced spending.
We had high oil prices in 1997 and we
didn't have to take from the CBR.
The non-oil revenue component is relatively
stable.
Handout: How Far Have We Come to Closing
the Fiscal Gap With Higher Oil Prices?
In January of 1999, the Department of
Revenue predicted exhaustion of the CBR
fund in January 2003, now using the Office
of Management and Budget's budget plan we
see the CBR fund with a zero balance in
August 2003.
511
CO-CHAIR PARNELL
So in that case there is not a big
difference in the long run?
MR. LOGSDON
Right, I've got some other scenarios to
show the effect.
515
Handout: State Of Alaska, Sources of
Revenue
This illustrates the exhaustion of the CBR.
Handout: Alaska State Revenue Outlook,
General Fund FY00
We updated this outlook using the January
curves for 2000 and 2001 and the futures
market price aiming at $21.78 per barrel
FY00 average and a projected North Slope
production volume of 1.058 barrels per day.
This gives us a projected oil revenue of
$1,502.8 million, projected other non-oil
revenue of $417.8 million, general fund
budget of $2,321.5 million and a projected
draw from the CBR fund of $400.9 million.
524
CO-CHAIR PARNELL
Is this for the current fiscal year 2000?
MR. LOGSDON
Correct.
Handout: Alaska State Revenue Outlook,
General Fund FY01
This uses a projected ANS oil price of
$18.86 and a projected North Slope
production volume of 1.045 barrels per day.
The result is an oil revenue of $1,218.9
million, projected other non-oil revenue of
$386.7, a general fund budget of $2,419.4
and a projected draw for the CBR fund of
$813.3 million.
530
CO-CHAIR PARNELL
Is the general fund budget amount the same
that is shown in the Governor's proposed
budget for FY01?
MR. LOGSDON
Yes.
CO-CHAIR PARNELL
Therefore the projected CBR draw is $813.3
million?
MR. LOGSDON
Yes.
CO-CHAIR PARNELL
Is the Governor's budget based upon an oil
price of $18.86?
MR. LOGSDON
I don't know. I only have the spending
number.
CO-CHAIR PARNELL
Ask Mr. Persily.
MR. PERSILY
The general fund budget expenditure is from
the Office of Management and Budget. The
projected oil revenue figure is not an
official number.
CO-CHAIR PARNELL
Is that the same figure that was used for
the December 15 release of the budget?
MR. LOGSDON
Yes.
If oil production or prices changed, the
projected CBR fund draw would change as
well.
Handout: CBRF Depletion Matrix, $ per
Barrel
This illustrates how long the CBR would
last under different spending and oil
revenue scenarios.
557
Handout: Revenue Sensitivity to $1 per
Barrel Change in Oil Price FY 1988-2010
This shows the spendable money for every
dollar in the oil prices. The amount has
steadily decreased since 1990 and expected
to continue through 2010.
Handouts: Oil Revenue and the BP/ARCO
Merger - Production Tax
The tax base is the netback value of
production calculated as the destination
sales price less transportation to that
destination.
The destination value is defined as market
value and is currently set as ANS spot
price. We believe that oil prices will
continue to be determined in the world
market and that the merger will not affect
destination prices.
Handouts: Oil Revenue and the BP/ARCO
Merger - Production Tax
Because of there are some structural
changes in who owns refineries and tankers,
we will continue to closely monitor
contracts to ensure that spot prices is an
accurate measure of destination value.
It is unclear whether we will be able to
continue to rely on spot prices as a
dependable indicator.
578
Transportation costs are the basic
deduction from the destination value. Those
are specifically defined in regulations.
The allowable costs will be largely
determined by what assets are employed and
not who owns them.
We are hopeful that the merger will lead to
cost savings and even reduce some of the
transportation costs. There is a strong
audit function.
Handouts: Oil Revenue and the BP/ARCO
Merger - Royalties
Royalties are also based on the netback
production value established by contract
with the State Of Alaska.
Contracts have been reactive and any final
agreement on transportation and or value
will be retroactive.
588
SFC 00 #3 Side B 9:57 AM
MR. LOGSDON
We believe we have sufficient protection.
The production divestiture and other
concessions by BP were designed to protect
the state's interest post manager. One of
the major things that could affect our
revenue over the long run is how much oil
gets produced. We would like to see a
healthy rate of investment in exploration
and development.
582
Handouts: Oil Revenue and the BP/ARCO
Merger - Property Tax
Property tax should be largely unaffected
by the merger since the production and
transportation facilities are commonly
owned and subject to appraisal methods
based either on regulated cash or
historical cost.
If the merger results in higher levels of
investment the tax levels could increase.
Handouts: Oil Revenue and the BP/ARCO
Merger - Income Tax
It is virtually impossible to calculate the
effect of the merger on this tax type
because modified apportionment is based on
so many elements.
Summarize, Department of Revenue does not
think the merger will have any short-term
negative effects on the state's revenue. We
will have to be diligent at watching
possible long-term effects.
565
Conclusion
564
MR. PERSILY
565
CO-CHAIR TORGERSON
Are the contracts reopened only for
negotiation of transportation costs? Who is
negotiating those contracts?
MR. LOGSDON
You would have to ask the Department of
Natural Resources. I think both destination
and transportation costs are being
discussed.
CO-CHAIR TORGERSON
Is that part of the charter agreement that
was signed by the Governor?
MR. LOGSDON
This actually goes back to original
agreements established in earlier
settlements. All of the agreements contain
clauses that allow renegotiations of the
terms.
CO-CHAIR TORGERSON
Do they require legislative approval?
MR. LOGSDON
I do not know.
CO-CHAIR TORGERSON
What is the actual reduction of income tax?
MR. LOGSDON
I don't know. We will get you that
information.
546
SENATOR ADAMS
What do you suggest the Committee watch for
in the March 2000 Petroleum Forecast? Do
you believe OPEC will continue to hold oil
production at the present level? Do you
believe that cold weather will continue and
allow for higher prices? Should we be
concerned that Iraq could flood the market
to help pay for its past wars? Or that
Russia will increase its oil development
with the change in government leadership?
What should we be watching for?
537
MR. LOGSDON
Our source book identifies our prediction
that prices will go down for all those
reasons. OPEC will increase production and
agree to an increase in quotas at their
March meeting.
Iraq is currently producing all they are
allowed, three million barrels per day, but
has the potential to produce more. The
United Nations has extended Iraq's ability
to shift $5.2 billion worth of oil under
the current embargo and a new agreement is
being written that will reestablish a
monitoring and inspection committee. This
agreement will completely lift the cap on
the amount of oil Iraq can export and will
allow some of the earnings to go toward
purchase of oil production services and
equipment. Cambridge Energy is a good
source for more information on the
situation in Iraq.
Because I cannot predict the weather, I
can't say if cold weather will be a factor
in keeping oil prices high.
The Russian economy is improving partly
because of high oil prices. The key is
getting pipelines to access some of the
production and the US is involved in this
endeavor. There is a real potential for
additional production from Russia.
It is just these kinds of scenarios that
the futures market is already considering
and incorporating. This is one of the
reasons why oil prices are much lower in
the futures market than they are today.
510
SENATOR ADAMS
Do you provide the House and/or Senate
Finance Committee co-chairs weekly updates
on price changes or information that could
affect oil revenues?
506
CO-CHAIR PARNELL
We wish we were.
SENATOR ADAMS
We should request that every two weeks.
506
MR. LOGSDON
We update our web site daily with info on
production and oil prices.
501
SENATOR WILKEN
I appreciate the information you provided
regarding the BP/ARCO merger and your
short-term expectations that the merger
won't affect state revenues. I would like
an analysis of BP's new exploration
budgets. While I am not privy to
confidential information, I understand the
exploration budget is only 50 percent of
the pre-merger amount. Have you looked at
that and assessed the long-term affect on
the state's revenue flow?
MR. LOGSDON
I have not but it is something we will be
looking at. We will hopefully have an
assessment in the Spring 2000 Forecast.
CO-CHAIR PARNELL
We learned last year about the tie between
energy prices and inflation. Please comment
on current inflationary pressures and how
they might have a bearing on the forecast.
487
MR. LOGSDON
Generally, even though oil prices have
gotten very high, the US economy has not
been significantly affected. I assume that
is because other prices, such as
agricultural products that may have offset
oil prices.
CO-CHAIR PARNELL
Conclusion of meeting.
470
Adjourn 10:10 AM
SENATE FINANCE COMMITTEE
LOG NOTES
01/11/00
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