Firing Back at ExxonMobil

The fraudsters at ExxonMobil must have some tightness in their jockey shorts today, thanks to Alabama Lt. Gov. Jim Folsom Jr.

Folsom, a Democrat, has proposed changes in the state's tax on oil and gas production in the wake of the Alabama Supreme Court's recent ruling that cost the state almost all of a $3.6 billion court judgment against Exxon.

The Supreme Court ruling split along party lines, with eight Republicans voting to overturn the jury verdict and the lone Democrat offering a stinging dissent.

Alabama's tax on natural gas is currently a percentage of the value of the gas after it has been processed. Folsom said the Legislature should look at changing it in the upcoming session to a volume-based tax levied when the natural gas comes out of the ground.

"If something is not done, the recent decision by the Alabama Supreme Court siding with Exxon and reversing an Alabama's jury's multibillion-dollar verdict will have devastating consequences on the people of Alabama," Folsom said.

A volume-based system would erase issues that came up in the court case about what costs of production the company could write off, Folsom said. "That way Exxon will have to pay the same way you do--based on what you pump."

Had the judgment stood, Folsom said, it could have helped fund Medicaid, state troopers, prisons, and many other state agencies--at a time when the state is looking at a serious budget shortfall for the 2008-09 fiscal year.

An Exxon spokesman admitted a number of states use a volume-based tax like the one Folsom recommended. But he still was not high on the idea.

"Clear thinking has prevailed in severance taxation since production began," Dean Peeler said. "Changing the metrics of the relationship would create disincentives for producers considering making risk-reward investment decisions."

Can't figure out what Peeler is saying? Allow me to translate for you: "We like the way the current system works because it allows us to cheat the state and commit fraud, and the Alabama Supreme Court let's us get away with it. Of course, we have given tons of money to the campaigns of the GOP justices, and that investment certainly paid off for us. We look forward to it paying off more in the future."

Those are the "metrics" Peeler does not want to see changed.

What about the "metrics" of the actual Exxon ruling? Folsom did not go into that. But here's the truth: The Alabama Supreme Court acted unlawfully and corruptly in making its decision. We've already touched on one way the court acted unlawfully. And we soon will be shining light on other fast moves by the state high court, moves that cost Alabama citizens dearly.

And where was Alabama's Republican Governor, Bob Riley, in all of this? Oh, he says it's not worth even trying to have the unlawful ruling overturned. Interesting isn't it that the lieutenant governor, a Democrat, is the one who has to do the heavy lifting for the people of Alabama?