The last revenue forecast of the Knowles-Ulmer administration issued last week portends a brighter picture for the state's financial future. According to outgoing Revenue Commissioner Wilson Condon, Alaska North Slope (ANS) crude is anticipated to carry a higher per barrel price over the next several years than previously predicted, thus easing the pressure on the state's budget.
Not discounting the positive nature of this news, the need for new revenues still remains the key focus of the incoming Murkowski-Leman administration.
The mission of the new administration is to get Alaska's economy moving forward by generating new revenues through resource development and improving governmental operating efficiencies.
The Department of Revenue fall forecast fixes the average price of ANS crude oil at $25.94 per barrel for this fiscal year, which ends June 30. The long-term average is factored at a price of $22 per barrel.
The revenue department had been predicting that North Slope crude would remain below $21 per barrel this year. ANS crude has averaged $26.43 per barrel since the beginning of this fiscal year in July and at times has exceeded $28 per barrel.
State revenue officials have acknowledged that the U.S. economic recovery and the prospects of war with Iraq have kept oil prices toward the upper reaches of OPEC's target range for crude oil of between $22 and $28 per barrel.
In responding to the revenue forecast in a press release issued last week by the Senate majority, Sen. Lyda Green, R-Mat-Su, the incoming Senate Finance co-chair said, "For years we have heard stories of impending fiscal doom as a result of revenue projections the legislative majority has contended were too low. Now in their last report we are seeing numbers more in line with what we thought they should be."
Senate majority leaders observed that the new oil revenue figures could close the $1.2 billion fiscal gap projected by this time last year by 40-50 percent. The forecast is also, for the first time, projecting a brighter picture for long-term oil revenues as well.
Commissioner Condon said that oil production is not expected to exceed the current level of 1 million barrels per day level for another six years without future development.
Prospects for future development grow stronger each day. The changing of the guard in the U.S. Senate should bode well for new exploration and development in Alaska.
According to a recent report in "Petroleum News Alaska," significant changes are well under way to streamline stipulations for leases in the National Petroleum Reserve-Alaska and add incentives for exploration and development in the outer continental self of the Beaufort Sea.
Henri Bisson, Alaska state director of the U.S. Department of the Interior's Bureau of Land Management, and Rance Wall, regional supervisor for resource evaluation at the Interior's Minerals Management Service, say their agencies are looking for ways to streamline permitting processes and encourage exploration on federal lands in Alaska.
Monday ... (marked) the beginning of a new era of leadership. (In) two weeks ... Gov. Murkowski will submit his first budget to the Legislature and then the work will begin in a climate of new vision, hope and cooperation.
--Juneau Empire - Dec. 1
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