Alaska’s financial gain comes at a price

By Larry Persily

As of this week, the state treasury already can bank on depositing about $200 million more in oil revenue than it would have received at prices before the president started a war against Iran, driving up the value of oil.

That’s the extra cash from just the past eight weeks.

Going forward, for every day the Strait of Hormuz is closed to safe tanker transit of Persian Gulf oil, state of Alaska revenues look to average over $3.5 million a day more than where they were at prices before the destructive political game of chicken between the hardline Iranian regime and the hardheaded U.S. president.

That $3.5 million-a-day average for additional oil tax and royalty deposits to the state general fund assumes prices at around $100 a barrel, about 40% higher than where they were before the war started.

But oil opened this week closer to $110 a barrel, as the market sees little hope that the dueling Iranian and U.S. blockades of Hormuz will end soon, allowing the normal flow oil and liquefied natural gas to resume. At that lofty price, additional state revenue would average closer to $5 million a day than what was expected before the war.

In simple checkbook math, the state is getting wealthier from the war. Not as directly as weapons manufacturers and prediction market gamblers betting on inside information about attacks that drive oil prices, but wealthier nonetheless.

Hopefully, the war will stop before more people suffer around the world because they can’t afford nitrogen-based fertilizer to grow crops, or can’t afford to pay their fuel or electricity bills, or can’t find propane to cook their food. That includes rural Alaskans who will pay big time when they refill their heating fuel tanks in the fall.

Hopefully, it will stop before more people die or are maimed by bombs dropped by both sides in the war.

But until the fighting stops — both the bombastic politics and the real bombs that kill people — Alaska looks to gain significant extra cash. Legislators, who have three weeks left before their adjournment deadline on May 20, are revising the state budget to reflect the higher revenues

The House and Senate are considering multiple proposals for using the extra cash. The list includes sending more money to school districts, more money to repair and rebuild aging school buildings, and more money for disaster relief, Village Public Safety Officers, child care recruitment and retention grants, Head Start, child advocacy centers and an increased state share of food assistance after Congress cut federal dollars.

All worthy causes that can put the money to good use to help people.

Legislators also look likely to use some of the war bonus to add to this fall’s Permanent Fund dividend payment to Alaskans, with the state Senate proposing an additional $150 “energy-relief” payment, at a cost of about $100 million.

Maybe in all the legislative debate over the budget, maybe among the people and programs that will benefit from the extra state dollars, maybe from Alaskans who will get a boost to this fall’s dividend, maybe everyone could think of the people who personally paid the price that added to our state wealth.

• This article originally appeared in the Wrangell Sentinel.