Governor Mike Dunleavy held a Tuesday press conference announcing that the state has 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 that was released. The increase is due to unexpected oil revenue as the governor requested the Legislature use some of the surplus to get immediate financial relief to Alaskans who are facing high fuel costs and 40-year record inflation hikes and to secure the remainder in savings.
The governor took to the podium asking the State Legislature to help alleviate the economic hardship for Alaskans by paying every eligible resident a PFD this year of at least $3,700. Dunleavy states that the rising oil prices are benefiting government finances and hurting Alaskans, saying that the funds need to be put into the hands of Alaskans when the bills are due.
The governor spoke on the energy relief check currently being considered in the State Legislature and the likelihood of it happening compared to his proposed $3,700 PFD:
“I think it’s great that the members of the legislature recognize that we are in an inflationary period and that people need help, but again, there’s really no reason to reinvent a process, a tool to do this with. We’ve had the PFD for decades. By maxing out the PFD in terms of the spread across the economy in the hands of individual Alaskans, we’re going to touch all aspects of the economy. remember, we’re still recovering, to a degree, from the fallout from COVID as well. We do have some uncertain times that we’re going through. As was mentioned, we’re not sure what the price of oil will be in a week or a month, but nonetheless, what the legislature is contemplating with an energy relief bill and funding would do the same through a PFD and a PFD that, as we believe, is at least $3,700 plus, we believe would really help the people of Alaska.”
The UGF revenue forecast has been increased by $1.2 billion for FY22 and $2.4 billion for FY23. Forecasts for revenue have also been increased for all years beyond FY23.
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.”
The transmittal letter states 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.”
Click here to view the Spring 2022 Revenue Forecast