Saturday, September 06, 2008

MN-01 : Davis opposes Palin Oil Plan

Dr. Brian Davis’ Letter to the Editor in the New Ulm Journal seeking votes in the September 9th Republican Primary, states his bottom line as “We need to increase domestic energy production without government placing too many obstacles in the way in the form of regulations and new taxes, fees or royalties.
Domestic energy is his primary, if not only, issue.

Since this is a Republican Primary, the comparison to other Republican’s positions tells voters a lot about Davis knowledge of the issue.

John McCain has praised Governor Sarah Palin (R-AK) for her knowledge of domestic energy production.
Yet her policies are in stark contrast to Dr. Davis.
In August 2007, Alaska Gov. Palin called state lawmakers into special session to enact her "Alaska's Clear and Equitable Share" plan. The Palin administration said its tax plan would place Alaska about average worldwide in terms of government receipts and it would also end tax credits for past oil field investments.
The legislation that was enacted raised taxes on the oil industry and sent money to struggling consumers. For fiscal year 2008, the state projects that the tax increase Palin pushed will generate an extra $2 billion for the state. This year, she used some of the proceeds to provide a $1,200 rebate to residents as energy prices rose.
The logic is simple. As the price of oil goes up, oil company profits rise. And as profits rise, so does the tax rate on oil production. When prices are $80 a barrel, the tax rate is roughly 37 percent, and the state’s budget runs a slight surplus. When oil hits $120 a barrel, the tax rate reaches about 50 percent of profits.

In many ways, what Palin has implemented on the state level is what Obama and other Democrats have sought as a “windfall profits” tax on oil companies.

Palin, at the state level, recognized that her citizens were not getting a fair share return on the state’s resources. According to Wood Mackenzie, a Scotland-based energy industry consulting firm, tax or other fiscal terms have changed in 28 countries since oil prices began their dramatic climb in 2001. Readers of my blog, know that I chastised Gil Gutknecht and John Kline in 2006 for their votes that did not correct this situation. Now, Davis is staking his campaign on the same misguided philosophy.

A study entitled "State Taxation, Exploration, and Production in the U.S. Oil Industry" concludes that raising oil production taxes has little effect on long-term oil production. The study states "Public officials in oil producing states have an incentive to increase severance taxes because they risk little lost production and stand to gain a substantial amount of tax revenue". It also notes that oil companies would not feel the full brunt of a state tax increase because they can deduct such taxes in figuring their federal corporate income taxes.
The report credits "a well-organized energy industry lobby" for keeping tax rates low.

Davis’ philosophy seems to understand the “energy industry” needs, but not the taxpayers.
Davis is committed to helping the “energy industry” to be able to drill in the Arctic National Wildlife Refuge (ANWR). Yet once again, Palin’s words should be considered “In advocating for oil development in ANWR, I have never guaranteed that this new domestic production would immediately reduce the price of oil. However, incremental production from the coastal plain should help reduce price volatility in the U.S. Additionally, ANWR development would send a strong message to oil speculators …” (Source : 6/23/08 Letter to Senator Harry Reid.)
Davis has not acknowledged the impact of speculators on oil prices.

Referring again to Davis’ LTE, he writes “Minnesotans are looking for honesty in their elected officials, people who can deliver real solutions to our most pressing problems. As a father of four, physician, taxpayer, and engineer with prior energy industry experience, I am confident that we can do better.”
I agree that we want “honest” elected officials.
Yet based on Davis’ Facebook page which states that he worked eight months in the energy industry in 1983, that comment is misleading.
Further, we do want our elected officials to be taxpayers, yet Politico reported that Dr. Davis failed to pay his property taxes on time “every year from 2003 to 2007.” Since Dr. Davis has not released copies of his income tax filings, voters do not know if they were filed timely or correctly.

As an Independent voter, I believe it is inappropriate for me to participate in either Party’s primary, yet I have a concern for the November election. The First District is an extremely competitive with the western portion having had Republican representation for over 20 years until Democrat Tim Walz’s victory in 2006. Additionally, the district’s largest county, Olmsted County, voted for Republican Tim Pawlenty for Governor in his last election.
If the District is going to be represented by a Republican, Dr. Davis does not have the knowledge, experience or philosophy that will help taxpayers.
To paraphrase Dr. Davis, "I am confident that the Republicans can offer a better candidate.”
When Gil Gutknecht’s term limit pledge indicated that he would not run in 2006, I advocated State Senator Dick Day for the job.
Day has legislative experience that Davis does not.

If you’re voting in the September 9th primary, vote Day.

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