$100-per-Barrel Oil Has Alaska Legislature at a Crossroads

March 2, 2022

Imagine yourself as a member of Alaska’s 60-person state legislature.  You have been in session for the past 45 days, and during that time, the price of oil has skyrocketed nearly 25%.  While no one expects the per-barrel price to stay in the triple figures (estimates run from $81 to $87 per barrel through the next fiscal year), it is still significantly higher than the State’s latest formal estimate of $71.

With federal infrastructure bill funding added to the mix, billions of dollars will be flowing into the state that wasn’t expected this time last year. 

So what do you do with the money? 

A few different scenarios have been raised by various legislative factions. One favors paying a supplemental dividend, to make up for the shortfall from the historical Permanent Fund Dividend payout amount.  Other legislators have proposed an “energy dividend”, much like Sarah Palin’s $1200 payout from 2008, which would be used to offset the supply-side-driven price increases for all forms of energy, thanks to the Biden Administration’s war on traditional energy.  Still others are proposing an enhanced capital budget, to lower the number of delayed and deferred maintenance projects.  A group wants to save it and pay back some of the billions spent by legislators over the past years from various state savings accounts.

Whatever the decisions made, one thing is certain: high per-barrel prices have tremendous benefits to the state’s economy, while simultaneously hurting consumers, with gas, heating, transportation and supply-chain costs mounting with each increase in the oil market.

Power The Future will continue to advocate for Alaska to advance projects and prospects designed to add jobs and grow the economy of the state.  Having tremendous oil, gas and mining resources under its surface should ensure a bright, prosperous and world-leading energy future for the state.  Let’s hope the Legislature examines all options and chooses ones designed to bring that bright future to bear.