High Oil Prices Give Alaskans a Second Chance: How Will We Use This Opportunity?
Research Matters No. 56. High Oil Prices Give Alaskans a Second Chance: How Will We Use This Opportunity?
September 20, 2011
Since 2005, Alaska's state government has collected as much in oil revenues as it did during the huge oil-revenue boom of the early 1980s: a combination of high oil prices and changes in the way the state calculates production taxes has created a second huge oil-revenue boom. But the oil creating this wealth is dwindling. That oil is from huge, low-cost oil fields on state-owned land, including the Prudhoe Bay field, and it has supported much of the economy and paid for most state government operations for decades.
How can Alaskans use the opportunity from the state's unexpected new oil-revenue boom to move into a post-Prudhoe Bay economy? A new paper by Scott Goldsmith, professor of economics at ISER, looks at that question. He reports that the transition to the future economy won't be easy, because no single resource can match the enormous value of Prudhoe Bay oil. A combination of other assets-the state's remaining conventional oil, new petroleum resources, savings accounts, other natural resources, and federal spending-can be the basis for a strong economy in the coming decades. But his central message is that Alaskans need to start thinking now about how best to manage those assets-so generations of future Alaskans can also enjoy a healthy economy.
The full 4-page paper is at: http://www.iser.uaa.alaska.edu/Publications/secondchance09192011.pdf .