JUNEAU -- Alaska North Slope crude continued its downward slide on Monday, trading below $18 a barrel for the first time since July 1999.
In New York trading, Alaska crude delivered to the West Coast brought $17.69 a barrel at its close, down 15 cents from Friday.
North Slope oil prices have sputtered along with world prices of crude because of global economic activity compounded by the September terrorist attacks.
It has caused some consternation among state economists in Alaska where oil revenues make up 65 percent of the state's general fund.
''We're looking at the potential of a fairly significant draw on the budget reserve if oil prices don't turn around pretty soon,'' said Chuck Logsdon, oil economist for the Alaska Revenue Department.
Alaska's $2.6 billion budget reserve -- a fiscal safety net designed to insulate state services from the volatile oil market -- is projected to be drained by 2005. Slumping oil prices could threaten to hasten its demise.
North Slope crude oil has, so far, averaged $23.20 for the fiscal year that ends June 30, Logsdon said. While that is above the Department of Revenue spring forecast of $22.35 per barrel, the gap is closing, he said.
State budget officials estimated about $630 million would be needed from the constitutional budget reserve to balance Alaska's budget. If oil revenues don't recover, the state could need as much as $700 million to balance the state budget, Logsdon said.
An increase in demand for oil could aid the state's fiscal picture along with a plan by OPEC to cut production by as much as 1.4 million barrels a day when it meets next week, Logsdon said.
''We've got two things we are counting on here, a cold winter and a quick recovery on the demand side. On the supply side, we might need some help from OPEC,'' Logsdon said.
A clearer picture of the state's fiscal condition will emerge in December when the department releases its fall revenue forecast, said state budget director Annalee McConnell.
McConnell said oil prices are falling more into line with the historical average and are an improvement over the $9 and $10 a barrel that the state weathered just a few years ago.
''It puts more emphasis on the need to have a long term fiscal plan,'' she said. ''But we're certainly not going to have the CBR depleted at the end of this year.''
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