Opinion: Low oil prices a ‘bah humbug’ for state treasury

Published 9:30 pm Thursday, December 25, 2025

It’s the season of warm wishes, goodwill, families and friends. It’s a time for gifts, sharing old memories and making new memories with the new year. It’s a break in everyday life to remember the past and think about the future.

Too bad Alaskans need to be thinking about how the state will come up with enough money next year to fully fund schools, highway projects, the ferry system, public services, repairs to aging facilities — and a politically acceptable Permanent Fund dividend that will help pay for residents’ holiday presents next year.

Santa carries a lot of weight, literally and figuratively, but the jolly guy can’t do anything to gift the state higher oil prices. Yet that’s exactly what the Alaska treasury needs under its Christmas tree this week.

Though oil revenues ain’t what they used to be when Alaska’s North Slope was putting 2 million barrels a day into the pipeline at its peak in 1988, this year’s average of almost 460,000 barrels a day still is expected to provide about one-quarter of the treasury’s general-purpose revenues, more than $1.4 billion.

But that is a forecast number, dependent on the price of oil — which is down. North Slope crude has dropped from $80 a barrel on Jan. 15 to just under $61 on Dec. 18. This year’s budget about breaks even at an average price of more than $65.

The difference between $60 and $65 oil equals about $150 million less for the treasury next year, which is lot of money when legislators — and the public — think about what they want to see in the next state budget.

It’s not like Santa has anything against Alaska, and there’s nothing the state can do about oil prices. North Slope oil is worth whatever the market will pay, and right now the market is flush with oil. So much so that at last count more than 1.3 billion barrels of crude was at sea, parked off to the side of sea lanes or aboard tankers moving real slow in hopes of finding buyers or at least better prices.

That 1.3 billion barrels at sea is the highest number since the worst of the pandemic shutdowns in April 2020, when oil prices fell to negative in some markets.

It’s not looking to get better for sellers anytime soon. The International Energy Agency forecasts oil producers will be pumping 3.8 million barrels a day more than the world needs next year, at least until companies scale back their production or economic growth and demand get stronger.

All that oil is coming from seemingly everywhere. From OPEC+ producers, which spent most of this year boosting production to win back market share; from the U.S., which set a record this year for oil production; Canada, also a new record holder; from the South American nation of Guyana, which reached almost 1 million barrels a day, a sixfold increase since 2021; and Brazil, which broke 5 million barrels a day this year, a record.

Producers planned all the new oil years ago, looking at higher prices and planning on rising demand. But the best laid plans of mice and men and oil company executives don’t always turn out as expected.

“What I can say with absolute certainty is this: An excess of oil affects the country and affects prices,” Angola’s Minister of Mineral Resources Diamantino Pedro was quoted by Bloomberg news service last week. Angola pumps more than a million barrels a day. “This country depends heavily on oil — I don’t say that with pleasure, but it’s the reality.”

He could have said the same thing about Alaska.

Larry Persily is a longtime Alaska journalist, with breaks for federal, state and municipal public policy work in Alaska and Washington, D.C. He lives in Anchorage and is publisher of the Wrangell Sentinel weekly newspaper.