Crude oil price down, but Alaska on track for big surplus says Williams

The price of Alaska crude oil has plummeted in the last six months, but an economist said Jan. 22 that the state is still in position to reap a big surplus.

Oil fell almost $30 a barrel in six months, but a higher-than-expected average price for the fiscal year of 2007 means the state could still collect a surplus of about $1.3 billion, Michael Williams, chief economist with the Department of Revenue, told the Senate Finance Committee.

The price of Alaska crude was $47.53 in mid-January, $28 less than its peak in July 2006. However, the average price so far for 2007 is $61.81. The 2007 fiscal year runs through the end of June.

The average price is the figure used to calculate the surplus and was about $2.70 higher than what the Revenue department had projected for mid-January.

At current production levels, a $5 drop in average price would cut revenues by about $500 million, according to the department’s forecast

In fiscal 2008 the department expects oil prices to average about $8 less than in 2007. Oil production is expected to drop 12 percent this year, but rebound in 2008.

Charles Fedullo, a spokesman for Gov. Sarah Palin, said Jan. 23 that the administration would wait for the first oil tax returns and the Revenue Department’s April forecast in crafting a budget for 2008.

“We’re going to try to keep to the goal of spending what we bring in,” Fedullo said.

—The Associated Press