State revenue forecasts for 2023 and 2024 say oil prices will dip, but not tank

Alaska’s economy heavily relies on a billions-of-barrels oil production system to keep the state budget afloat
State revenue forecasts for 2023 and 2024 say oil prices will dip, but not tank
Published: Mar. 21, 2023 at 10:35 PM AKDT
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ANCHORAGE, Alaska (KTUU) - The state’s Department of Revenue released its revenue forecast for spring 2023 and the 2024 fiscal year, indicating the state should expect decreasing oil prices and reduced oil production. Gov. Mike Dunleavy hosted a press conference elaborating on a Department of Revenue press release that shared the forecast data.

According to the new projections, oil prices are expected to decrease by $3.20 per barrel for the 2023 fiscal year and by $8 per barrel for the 2024 fiscal year when compared to the numbers in the Department of Revenue’s revenue forecast from the fall of 2022.

In addition, the state’s oil production forecast is also projected to decrease by about 6,500 barrels per day in the 2023 fiscal year and 7,200 barrels per day in 2024. These predictions indicate a reduction in the state’s Unrestricted General Fund revenue forecast, with a $246 million reduction this year and $679 million the following year.

The press conference today acknowledged the impact of these projections on the state’s near-term spending plans and longer-term legislative goals. Dunleavy said that lawmakers may have to make difficult decisions regarding the budget during the coming months. The projected decrease in oil prices may have significant implications for the state’s budget and revenue forecasts over the next two fiscal years.

As to how the information released today impacts near-term legislative goals and spending, the governor said that it’s too early to tell.

“That’s difficult to answer, but in the end, we’ll get something that the Legislature can agree on,” Dunleavy said.

“And if there needs to be a look at vetoes, we’ve done that every year, we’ve looked at that as well, we’ll continue to look at that. So it’s tough to predict what that’s going to look like,” Dunleavy said.

According to Dunleavy, discussions will become increasingly focused on the state’s financial situation as more information becomes available and budgets shift.

The drop in oil prices is not the only concerning subject on Alaska’s horizon that arose during the press conference. Dunleavy also addressed other pressing issues such as carbon management, education and outmigration.

On the subject of outmigration and its reverberating effect on Alaska’s workforce, Dunleavy said he’s aware some Alaskans don’t support having a large population move into the state, but didn’t agree with that perspective.

“That’s what’s going to drive the economy, that’s what’s going to make Alaska a vibrant place to live,” Dunleavy said.

Dunleavy also discussed lawmaker pay, a topic receiving hot debate among officials in Alaska in the last week.

The governor says it’s something that he views “will always be a politically-charged discussion,” and is perhaps easier to resolve in geographically smaller states because legislators can drive to their capitol, and go home at night.

“I think you want to take an approach, where you have a pool drawn from as many of the ‘Average Alaskans’ as possible. You want to be careful you don’t turn this into an aristocracy, where only those with incredible wealth can afford to spend time in Juneau,” Dunleavy said.