This opinion piece was first published in The Washington Times.

Lawmakers in Alaska face tough choices about how to best balance the state budget in the coming months.

A multitude of proposals have been suggested, including raising taxes on the oil and gas industry. While the temptation may be strong to try to raise more money from the energy industry, even in conservative states, trying to plug the budget hole by taxing petroleum producers will inevitably backfire by reducing Alaska’s energy production.

That will only make the United States more dependent on Russia and Iran for our energy and, ultimately, reduce revenue.

If Alaska removes tax credits or raises its severance tax, as some lawmakers are proposing, it will narrow producers’ already-thin profit margins, which could stifle future investments in this sector and put this revenue stream in jeopardy. Proponents of these tax increases believe they will force petroleum producers to pay their “fair share.”

But what is fair? Previous proposals would make North Slope producers pay more in taxes on each barrel of oil produced and subject privately owned oil producers to Alaska’s steep corporate income taxes.

The fact is, Alaska’s oil and gas producers have less room to maneuver than nearly any other state. Extracting oil from Alaska’s icy tundra is exorbitantly expensive because Alaska’s North Slope can be drilled only in the winter when the swampy Arctic ground is frozen solid.

Consequently, specialized drilling equipment and labor are needed to penetrate the ground and extract the oil. And once the oil is out of the ground, it is pumped 800 miles south to Valdez and shipped out to its destination.

The high cost of pumping oil from the permafrost combined with high transportation tariffs significantly raise the investment risks for companies brave enough to even attempt drilling in the Arctic Circle. Levying new severance taxes on the industry risks making Alaska’s business climate as hostile as its natural one at a time when new investment into oil extraction is desperately needed to revitalize production.

After 60 years, Alaska’s developed oil fields have given up most of their easily pumped oil. Daily crude oil production on the North Slope has fallen from its peak of 2 million barrels per day in the 1980s to just 430,000 per day in 2022. The 1.5 million barrels per day lost to natural decline would produce enough gasoline to fill half a million Americans’ tanks every month.

The productive life of Prudhoe Bay and other fields, however, can be extended with enhanced recovery methods and drilling new winterized hydraulic fracturing wells. But these methods that recover the remaining oil are costly, requiring new equipment and expertise. Spurring investment in these operations can be encouraged by lowering, not raising, taxes.

With many financial and development challenges facing Alaska’s few remaining oil producers, the last thing they need is to be treated as the state’s rainy-day fund. As Gov. Mike Dunleavy has rightfully said, “Alaska has the resources, creativity and ability to achieve energy independence that will fuel a growing economy.”

The world is finally waking up to the danger of reliance on Russia, Iran and other adversaries for energy. Many will be willing to overlook the higher cost of production in Alaska for the sake of geopolitical stability and sustainable energy independence, but this advantage will only take the state so far. There is no reason to risk this opportunity for a self-imposed blunder.

How Alaska’s government balances its books will ultimately set an example for other energy-producing states, including Alabama, New Mexico, Texas, Louisiana, North Dakota and Oklahoma. Alaska can set an example by finding ways to reduce spending without raising oil production taxes, showing companies that the state is a good investment to redevelop old resources and drill for new ones.

Isaac Orr is a policy fellow at Center of the American Experiment. Trevor Lewis is an economic research analyst with the Economic Research Center at the Buckeye Institute.