Gloomy state revenue forecast calls for $62 a barrel oil prices during coming fiscal year
- Mark Sabbatini
- 1 hour ago
- 2 min read
Current year’s estimate of $65.48 per barrel is below $68 forecast issued in spring by the Alaska Department of Revenue
By Mark Sabbatini
Juneau Independent
This is a developing story.
A sharp drop in oil prices is expected to continue beyond next year, with the state’s official revenue forecast issued Thursday projecting prices of $62 a barrel for the fiscal year starting next July 1.
That compares to prices of $85.24 for fiscal 2024, $73.86 for fiscal 2025 and a projected $65.48 this year — the latter down from a forecast of $68 this spring, according to the Alaska Department of Revenue. Experts attribute the dropping prices to global turmoil such as conflicts involving Russia, domestic uncertainty due to President Trump’s tariffs and other economic policies, and a glut in global supplies.
Low prices have already affected the state’s finances — including a current budget that contained the lowest inflation-adjusted Permanent Fund Dividend in history this fall — and mean even more cuts are likely during the coming year. Gov. Mike Dunleavy is scheduled to release his proposed budget this week and, during a meeting with reporters on Tuesday, declined to answer specifics about what that budget would contain.
“I think we have a tough couple years,” he said. “Next three, four, five years are going to be tough. We're going to have to make some tough decisions, and that's why we will roll out a fiscal plan solution for the next five years.”
The current year’s budget of about $12 billion had a small surplus based on the spring forecast of oil averaging $68 a barrel and will not incur a deficit if prices average $64. If the price for the current year drops below that state lawmakers will likely need to cover the difference by tapping the $2.9 billion Constitutional Budget Reserve Fund.
The forecast of $62 next year also means lawmakers will likely be facing a deficit of roughly $200 million next year with a status quo budget that makes no adjustments for inflation.
The revenue forecast issued Thursday does contain some optimistic long-term projections. It notes oil production that averaged 468,000 barrels per day last year and is expected to average 457,000 barrels this year is forecast to increase to 517,800 barrels next year. Production is expected to continue to increase to 621,200 barrels per day by fiscal 2036 as new fields, some occurring under Trump administration incentives, come online.
The updated forecast also projects oil prices to rise to $75 a barrel by fiscal 2036.
• Contact Mark Sabbatini at editor@juneauindependent.com or (907) 957-2306.
