MADISON -- Gas tax or no gas tax, Murphy Oil intends to stay in Superior, Dave Podratz, refinery manager told a Superior Days session Wednesday.
Podratz was leading a discussion with Department of Commerce Secretary Roger Ervin about Gov. James Doyle's oil tax proposal when others in attendance voiced concerned about Murphy Oil's ability to remain in Superior if the Legislature approved the new tax.
"Tax or no tax, we're here," Podratz said. "If the tax goes through it will make life a little more difficult but let's not even talk about shutting down."
Ervin said he understands the importance of Murphy Oil to Superior and doesn't want the tax to harm the refiner's ability to stay in business. Instead, the tax rate would be made progressive by imposing a lesser rate on smaller earning operations like Murphy has in Superior, and topping out a 3 percent on companies with revenues above $120 million.
State Sen. Robert Jauch, D-Poplar, who has been seeking favorable treatment for Murphy Oil in the governor's budget bill, said that even when facing pollution litigation, the refiner never threatened to pull out of Superior.
ADVERTISEMENT
"Everyone knows the importance of this company to the community; they're the single largest donor to civic charities," Jauch said.
Murphy shelved its plan to expand the 58-year-old refinery last year after oil prices plummeted, gas sales declined and it lost its partner interested in developing additional supplies of crude oil from Canadian tar sands.
"The current [tax] discussions have nothing to do with whether we expand or not. That's a separate issue," Podratz said.
Podratz received some support from Commerce Department Deputy Secretary Aaron Olver, who also met with Superior Days delegates.
"Commerce obviously would want to see this [tax] policy implemented in a way that wasn't destructive to Murphy Oil and ... we're certainly happy to be an advocate for you on that," Olver said.
Podratz said he was "encouraged" by the response from the Doyle administration.
"There's still some work to do in trying to find a creative solution to this ... certainly that [progressive] amendment introduced by Jauch helped lessen the pain but I am encouraged so far," he said.
The tax on oil-company revenues would generate an estimated $271.8 million annually for the state and would be substituted for the revenue lost after Legislature eliminated the annual inflationary increase in the state gasoline tax.
ADVERTISEMENT
Under the Doyle proposal, Murphy would pay a "significant amount of tax," whether it makes a profit or not, and "some years the Superior refinery loses money, because we operate on very thin margins," Podratz said.
As drafted, the oil tax proposal would prohibit companies from passing the tax onto its customers, which Jauch said certainly would be challenged in court.
Ervin was confident that it could be successfully defended, but later admitted that no other industry in the state was subjected to a similar tax with an "anti-pass through" provision.
About 50 percent of the Superior refinery's output is asphalt, which is an unusually high percentage by industry standards, Podratz said, but a consequence of the heavy Canadian crude it refines. Although the slump in gasoline sales may continue this summer, Podratz is optimistic that the demand for asphalt products will be greatly boosted this year by the number of road projects started with the infusion of federal stimulus money.
