Economy / Fiscal Policy

Alaska’s state government is sitting pretty right now, with oil revenues at record levels, $60 billion in savings, and maybe another $100 billion worth of petroleum in the ground. Still, a new paper by Scott Goldsmith, professor emeritus of economics at ISER, finds that trouble is looming, with declining oil production and growing state spending. 

Oil started flowing through the trans-Alaska 35 years ago this summer, on June 20, 1977. Since then, the state government has collected $170 billion in revenues from North Slope oil, in today's dollars. A new paper by Scott Goldsmith, professor emeritus of economics at ISER, assesses what the state has done with its oil wealth so far. 

To read the paper, click here (PDF, 944.8KB).

After nearly a decade of explosive growth, federal spending in Alaska has turned flat. A new analysis of federal spending in Alaska by Scott Goldsmith, professor of economics at ISER, finds that except for temporary stimulus funds provided under the American Recovery and Reinvestment Act, federal spending in the state has been roughly the same for the past several years. The analysis discusses the composition of federal spending in Alaska, reviews stimulus spending, and provides examples of the importance of federal funds to the state economy.

A new analysis by Scott Goldsmith, professor of economics at ISER, estimates that Alaska’s state government currently has a petroleum nest egg of about $155 billion, including both the value of revenues from oil and gas yet to be produced and money already in the bank. The state can afford to spend about $6.2 billion a year from the earnings of that nest egg for decades to come, taking population growth into account. But this fiscal year, the state is expected to spend close to $7 billion—shrinking the nest egg for coming generations. 

The total value of construction spending statewide in 2012 will be $7.7 billion, up 3% from the level in 2011. That’s the finding of the 2012 Alaska construction spending forecast, prepared by Scott Goldsmith and Mary Killorin of ISER for the Construction Industry Progress Fund and the Associated General Contractors of Alaska.  Private spending for construction will be up, and large state capital budgets in recent years have offset the decline in federal construction spending.

Download the PDF (2.9MB).

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.

Think about this: if oil had never been discovered on the North Slope, Alaska's economy today would be about half as big. And to keep the economy healthy as time goes on, Alaska needs new oil production: nothing else—including North Slope natural gas—can replace oil in the state's economy. These are the findings of a new paper by Scott Goldsmith, professor of economics at ISER.