Consultant: State Handling of Gas Tax Nonsensical

A consultant to the Alaska Legislature says the state's system of taxing oil and gas production together is nonsensical.

Pedro van Meurs says the state would see huge losses, if a company wants to produce gas in addition to oil. He calls this a serious deficiency of the tax structure.

Under the current system, there's a risk of a dilution effect on revenues when oil prices are high relative to gas. Sen. Bert Stedman says there's dilution of about $80 million a year currently without any gas being sold.

Legislation has been introduced that would separate, or decouple, oil and gas production for tax purposes. Van Meurs says the issue can be addressed without decoupling.

Van Meurs testified Tuesday before a joint hearing of the Senate Finance and Resources committees.