Revised revenue forecast: $91/barrel, $545M extra for state for rest of fiscal year due to Iran war

New current-year oil price forecast of $75.26 far exceeds December’s $65.48 prediction; outlook for fiscal year starting July 1 is $75 a barrel, up from $62 in December

A customer stops to fuel at vehicle at Deharts Auke Bay Store on Friday, March 13, 2026. Juneau’s average gas price for regular unleaded has risen about 16 cents a gallon during the past month and 28 cents during the past year, according to AAA. (Laurie Craig / Juneau Independent)

By Mark Sabbatini

Juneau Independent

This is a developing story.

An average oil price of $91.09 per barrel between now and June 30 is expected to result in $545 million of extra revenue Alaska’s state government, according to a forecast released Friday by the state Department of Revenue.

The forecast assumes a major increase in oil prices due to the two-week-old war against Iran will continue for months, but won’t extend throughout the coming fiscal year that begins July 1. Next year’s prices are expected to average $75 a barrel, "which assumes that prices will begin FY 2027 over $80.00 per barrel and decline throughout the fiscal year.

"As always, it is important to note this forecast represents one scenario within a range of potential outcomes," Janelle Earls, the revenue department’s acting commissioner, wrote in a cover letter for the forecast. "This is true now more than ever given current world events."

The forecast is major financial swing from the gloomy outlook offered by the department in December.

The Decemer forecast called for oil prices during the current fiscal year to average $65.48, which was below the $68 average predicted a year ago. The forecast issused Friday predicts an average price of $75, based on $67.34 during the first eight months of the fiscal year and $91.09 the final four months.

Next year’s average was $62 in the December forecast and the new $75 prediction means the department is also forecasting an additional $510 million in revenue.

The forecast is likely to resolve many, but not all, budget struggles currently facing state lawmakers. A supplemental budget for the current year of $373.5 million was put on hold Thursday due to questions from some House members about whether oil prices might rise enough to fully fund it rather than tapping into a reserve fund. Also, the extra revenue forecast next year would likely allow fund a status quo budget, including a $1,000 Permanent Fund Dividend, without accessing reserves.

However, while state policymakers might see the skyrocking oil prices due to the war as a boon — in the financial sense, at least — what is being called "the largest oil supply disruption in history" is wreaking havoc in many other ways including gas prices.

Juneau’s average gas price for a gallon of regular unleaded has risen about 16 cents a gallon during the past month and 28 cents during the past year, according to AAA. The increase is higher nationwide, with the average of about $3.60 per gallon Thursday up from $2.94 a month ago.

• Contact Mark Sabbatini at editor@juneauindependent.com or (907) 957-2306.