Oil Revenue Will Continue to Play Key Role in Financing State Govt.
December 13, 2003
The purpose of the forecast is to provide the Governor, Legislature and citizens of the State of Alaska with a summary of state revenue and a forecast of future revenue. The revenue forecast is categorized into four major components: oil taxes, non-oil taxes and fees, federal dollars and investment revenues.
Oil revenues continue to dominate the revenue picture - providing over 80% of Unrestricted General Purpose Revenue. Oil production levels, however, are roughly half of Alaska's peak production in 1989. As a result, oil revenues are much lower now than in the past.
"We continue to focus on the bigger picture of state revenues, including the earnings from the Permanent Fund, federal revenue and our reserves in the Constitutional Budget Reserve Fund (CBRF)," said Corbus. "The CBRF continues to play a large role in Alaska's financial future. Oil production has fallen to just under 1 million barrels per day (from its peak of 2 million barrels a day in 1989), and as a result, we face a structural deficit that requires annual expenditures from the CBRF - even when oil prices are over $30 per barrel. We must prepare for life after the CBRF has been exhausted.
"On the production side, we continue to make a reference forecast that looks only at oil fields that have already been discovered. Some of these fields have not yet been developed and others will be more intensively developed over time," Corbus said. "We forecast production will average 0.996 million barrels a day in Fiscal 2004 and stay above 0.9 million barrels a day through FY 2014. Production from the super-giant Prudhoe Bay continues to decline, but new smaller fields have been discovered and are being brought on line. In this forecast we also examine oil and gas exploration and development opportunities that could significantly improve our revenue outlook."
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