|
Department of Revenue projects $20.11 a barrel for fiscal year 2000 Commissioner Wilson Condon emphasizes 60-month average near $17.15 over past 10 years Kristen Nelson PNA News Editor
While the state’s fall revenue forecast is based on $20.11 a barrel for Alaska North Slope crude in destination markets, up substantially from the department’s spring forecast of $12.11 a barrel, the increased price is not enough to balance the state’s budget. The figures are for the fiscal year ending June 30.
Revenue Commissioner Wilson Condon said Dec. 8 that the price of ANS crude at the market would have to average $26.50 a barrel over the fiscal year to balance the budget, requiring an average price of $32.50 a barrel for the rest of the fiscal year. The 2000 fiscal year average price to date is $20.50 a barrel, he said, and the department expects that the price will drop in the spring as seasonal demand drops and as Organization of Petroleum Exporting Countries is expected to increase production quotas in March — increasing crude supply and driving the price down.
For fiscal year 2001, the department is projecting an ANS price average of $18.26 a barrel. Thereafter, Condon said, the department expects the price to stay “in the high 17s.” Looking back over the past 14 years, “since the prices collapsed at the end of 1985 and the beginning of 1986, we’ve seen a pretty steady long-term average of oil prices at about $17.15 a barrel,” Condon said. Going forward, Condon said, the department’s forecast is based on the view that that average is likely to persist.
“No matter what may happen in any one year, history proves that oil prices ride a roller coaster — but generally come home to the same spot,” Condon said in his letter to the governor on the fall forecast. “Over the past decade, the rolling 60-month average price for North Slope crude has been between $16.39 and $17.74 per barrel 95 percent of the time.”
Production expected to hold steady North Slope production is expected to hold fairly steady between Fiscal 2000 and Fiscal 2006, ranging from 1.028 million barrels per day to 1.058 million barrels, Condon said. Though the department five years ago predicted that production would drop below 1 million barrels a day by 2004, the application of new technology and successful exploration of new fields have been good news to the state and have extended that projection to at least 2007.
Despite higher oil prices and steady production, Alaska’s reliance on oil revenues continues to slip. Looking at the state’s total revenue picture for fiscal 2001 – counting restricted and unrestricted funds – the state’s No. 1 source of revenue will be investment earnings at an estimated $2.124 billion, almost one-third of the $6.4 billion total, Condon said. More than 90 percent of that will come from Permanent Fund earnings. The No. 2 revenue source to the state next year will be federal funding, followed by oil taxes and royalties in the third spot.
“Though oil takes the center stage because of its volatility and the jobs that come from oil development,” Condon said, “it is no longer the leading source of state revenues.”
Oil still plays a major role in the annual state budget debate, Condon explained. “Because most of the investment income stays in the Permanent Fund or goes out in dividends, and because federal funding must be used for restricted purposes such as roads, airports and medical care, oil remains the major source of revenue for many of the most important public services provided by government.”
Copies of the fall revenue forecast are available at Department of Revenue offices in Juneau and Anchorage, and may be downloaded from the state’s Web page (www.state.ak.us) and the department’s Web page (www.revenue.state.ak.us).
| 