Shipping news: there's an uptick in Alaska: SB21 and the transportation industry.

• Author: Strieker, Julie
• Position: SPECIAL SECTION: Transportation

Over the past year, Jim Scherieble has been having the kind of problem that every business manager wants to have: almost too much business.

Scherieble is general manager of Kenworth Alaska, which sells and services the vehicles that do much of the heavy transportation and field work for Alaska mining, oil and gas industry, hauling, and shipping. After a series of slow years during the Great Recession, Scherieble saw truck sales double and then rise even more in just a matter of months. The trend continued into this year.

"Business is crazy right now," Scherieble said in spring 2014. "I had to hire another salesman because my main salesman was swamped. I had the paperwork for twenty-eight truck orders piled up on his desk."

The numbers bear him out. In 2009, 2010, and 2011, Scherieble's dealership sold fewer than 50 trucks annually. In 2012, that number jumped to 108, which he attributes mostly to an improved economy and businesses upgrading their fleets, which had stagnated after an emissions regulation change spurred fleet changes in 2006, followed by the economic downturn.

Then came 2013 and business boomed. Scherieble places the uptick squarely on an oil tax revision passed by the Alaska Legislature in April 2013.

More Alaska Production

Governor Sean Parnell's More Alaska Production Act, generally referred to as Senate Bill 21 or SB21, replaced the ACES system championed under Governor Sarah Palin. Implemented in 2007, ACES featured a complicated tax levy that began at 25 percent and a progressivity clause that raised the tax rate to more than 50 percent as oil prices rose. It immediately boosted state coffers, but oil companies said it ate too deeply into their profits when oil prices were high, which made them less likely to consider new investment in Alaska.

Critics of ACES said falling oil prices and declining production threatened Alaska's long-term ability to provide services. Oil taxes and royalties make up more than 90 percent of Alaska's budget.

Alaska oil production is only a quarter of its 1988 peak of 2 million barrels per day and is declining at a rate of 6 to 8 percent annually. Despite estimates that Alaska's oil fields still contain billions of barrels of recoverable oil, production has been declining. Once the top oil producer in the United States, Alaska is now fourth--after North Dakota, Texas, and California.

When he unveiled SB21, Parnell said the only way to increase oil production in Alaska is to cut taxes. SB21 replaces ACES with a 35 percent flat tax and...