At last count, the price of Alaska North Slope crude was hovering just under $80 a barrel.
That’s good news for Alaska’s economy.
Add to that the legislature’s decision to tap into the Permanent Fund’s earnings to pay the bills and the state is suddenly a lot closer to a balanced budget.
“I saw one day where the Alaska oil price got slightly over $80 a barrel, but we’ve been in the high 70s for the last couple of weeks,” said Ken Alper, director of the tax division at Alaska’s Department of Revenue.
Each time the price per barrel of oil climbs up, Alper has basically the same message.
“It’s good for Alaska’s economy to have higher oil prices, there’s no question about that,” he said.
But, prices have to get higher — and stay higher — to have a lasting impact on the state’s budget.
“Should the current prices hold, we will have our first balanced budget in several years for fiscal year ,” Alper said.
Alaska could have a balanced budget next year if prices stay around $72 a barrel — that’s about $10 higher than the official forecast the Department of Revenue put out in March.
Alper said that number is the break-even point for the state’s budget. That’s the point when the state starts bringing in enough revenue from oil to pay all the bills. Until 2018, that break-even price was a lot higher, at more than $90 per barrel.
But, the legislature’s decision to draw money from the Permanent Fund’s earnings last session gives the state another $1.7 billion to spend. Now that the state is that much closer closer to a balanced budget, it takes a lot less oil revenue to close the gap.