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After 35 years, a staggering oil fortune University economist tallies just how many billions of bucks the state of Alaska has collected, shows what became of the money Wesley Loy For Petroleum News
You probably know the state of Alaska has raked in a lot of oil revenue over the years. You might also know it stands to collect a lot more.
But on both counts, how much is a lot?
Scott Goldsmith is here to tell us.
The longtime economist with the University of Alaska Anchorage’s Institute of Social and Economic Research has put together the numbers in a five-page research note.
He begins by observing that 35 years ago, on June 20, 1977, crude oil produced from state-owned land on the North Slope began flowing south through the trans-Alaska pipeline.
“Since then, the state has collected $170 billion in oil revenues, in today’s dollars,” he writes. “Petroleum (both oil and gas) still in the ground might generate another $100 billion for the state.”
More than ever Goldsmith retired June 30 but will continue working part-time as a professor emeritus.
In his research note, he explains how state oil revenue has been higher than ever in recent years, even though North Slope production now runs at less than a third of its 1988 peak of 2.1 million barrels per day.
“Oil revenues were high in the early years of pipeline operation, because both the throughput and the price of oil were high,” the note says. “In the seven-year period from 1980 through 1986, the state collected $47 billion in revenues, measured in today’s dollars.
“But in the last seven years revenues have been higher, in spite of lower throughput, due to a combination of the highest oil prices on record and a restructured production tax. Between 2006 and 2012, the state collected $52 billion in revenue. It collected close to $12 billion just in the peak year of 2008.”
Alaska, of course, does have other industries, and other sources of revenue. But oil utterly dominates, Goldsmith explains.
From 1977 to 2012, total state spending was $177 billion, not including outlays of federal dollars or state restricted funds. Of this amount, $159 billion or 90 percent was from oil-related sources.
The oil revenue stream was so strong that the state was able to eliminate its personal income tax in 1980.
Where did it go? Oil accounts for 98 percent of state natural resource revenues, dwarfing collections from other industries such as fishing and mining, Goldsmith writes.
In terms of what Alaska has done with its oil bonanza, the professor explains that $125 billion or 74 percent was spent on government services and programs through the state’s general fund, with $45 billion or 26 percent going into savings accounts such as the Alaska Permanent Fund.
“The savings accounts have generated $46 billion of investment earnings over the years,” Goldsmith writes.
His note is part of ISER’s Investing for Alaska’s Future research initiative, funded by a grant from Northrim Bank.
Find the note online at http://bit.ly/PT3Dph.
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