Unexpected oil revenue to the State has created a projected $3.6 billion increase to the revenue forecast over this year and the next, according to the Alaska Department of Revenue’s Spring 2022 Revenue Forecast released today. Alaska Governor Mike Dunleavy requested the Legislature to use some of the surplus to get immediate relief to Alaskans who are facing high fuel costs and 40-year record inflation hikes and to secure the remainder in savings.
“Rising oil prices are benefiting government finances and hurting Alaskans,” said Governor Dunleavy. “I’m asking the Legislature to help alleviate economic hardship for Alaskans now, by paying every eligible resident a PFD this year of at least $3,700. We must get funds into the hands of Alaskans now when the bills are due, not in a month’s time.”
Deputy Commissioner of Revenue Brian Fechter also spoke to reporters at today’s news conference. “Due to current market conditions, we are presented with a tremendous opportunity to use this additional revenue to provide relief to Alaskans currently grappling with high inflation all while putting billions into savings to deal with future price volatility,” Fechter said.
The Revenue Forecast includes the Department’s spring forecast of oil price, oil production, and state revenue. The Spring 2022 Revenue Forecast can be found here: www.tax.alaska.gov
The Unrestricted General Fund (UGF) revenue forecast has been increased by $1.2 billion for FY 2022 and $2.4 billion for FY 2023. Forecasts for revenue have also been increased for all years beyond FY 2023.
“Under the 10-year outlook, we can have surpluses while paying the PFD,” Governor Dunleavy said. “We can also rebuild our savings with these surpluses in the range of $11 billion over ten years, based on a conservative forecast of $70 plus per barrel to 2031.”
The transmittal letter presenting the Spring 2022 Revenue Forecast states “in terms of petroleum revenue, the revenue forecast is based on ANS (Alaska North Slope crude) oil prices of $91.68 for FY 2022 and $101.00 for FY 2023, stabilizing at $77.00 by FY 2031. The oil price forecast is based on futures market prices through FY 2029, followed by an assumption that prices will increase with inflation thereafter. Based on the higher forecasted oil prices, petroleum is once again expected to be the largest source of UGF revenue for FY 2022 and FY 2023, contributing over 50% of expected UGF in each of those two years.”
As for oil production, “for FY 2021, ANS oil production averaged 486,100 barrels per day. ANS oil production is expected to average 481,800 barrels per day in FY 2022 and 502,300 barrels per day in FY 2023, before climbing to 576,600 barrels per day by FY 2031,” the transmittal letter states.
“As your Governor, I can’t choose the amount of the PFD. I wish the law gave me such authority, but it doesn’t. Only the Legislature can make this happen,” Governor Dunleavy said. “We have the resources. We have the duty to do something to help now. Alaskans are paying the price in these uncertain times. Rural Alaska is about to see the highest fuel contracts ever. Gas prices have gone up nearly a $1/gallon in a month in Southcentral. The consumer price index rose 7.9 percent, the fastest pace in 40 years. I urge the Legislature to offer relief to Alaskans now.”
The news conference is streaming live and will be recorded. It can be viewed on Governor Dunleavy’s Facebook page.