North Slope oil dips below break-even level

North Slope oil dips below break-even level

Drop is forecast to be temporary

For the first time since the start of the state fiscal year on July 1, North Slope oil prices have dipped below the break-even point for the state budget.

On Friday, the value of Alaska North Slope crude oil hit $70.49 per barrel. According to estimates by the nonpartisan Legislative Finance Division, if North Slope production averages $71 per barrel and 526,600 barrels of oil per day, the state will receive enough money from petroleum taxes to erase the state deficit.

That’s because the Alaska Legislature earlier this year approved Senate Bill 26, which calls for a portion of the earnings of the Alaska Permanent Fund to be used for general government expenses. Of the $2.7 billion withdrawn from the Permanent Fund in this fiscal year, $1 billion has been used for dividends, and $1.7 billion will be used for expenses.

Without that $1.7 billion, North Slope production would need to average nearly $100 per barrel for the state to break even on its budget.

Prices peaked at $85.36 per barrel on Oct. 3 amid concerns over renewed sanctions against the nation of Iran. Without Iranian oil, it was thought that world supplies would be insufficient to meet demand. The Organization of the Petroleum Exporting Countries (OPEC) responded to the sanctions by boosting production, an act that has kept oil prices low.

That trend may reverse itself soon: OPEC countries are scheduled to meet this weekend in Abu Dhabi and have signaled they may cut production, Bloomberg reported.

If the current price dip proves temporary, the state’s fiscal situation is unlikely to be affected. Since July 1, prices have averaged $75.95 per barrel, according to Department of Revenue figures, and it is the average price across the entire fiscal year — from July 1, 2018 to June 30, 2019 — that determines whether the state runs a deficit or a surplus.

Production averages have been below the needed 526,600 barrels per day, but winter production is higher than summer production, which is affected by maintenance.

• Contact reporter James Brooks at or 523-2258.

More in News

The Norwegian Cruise Line’s Norwegian Encore docks in Juneau in October, 2022. (Clarise Larson / Juneau Empire File)
Ships in Port for the Week of May 28

Here’s what to expect this week.

File Photo
Police calls for Saturday, May 27

This report contains information from law enforcement and public safety agencies.

Dozens of Juneau teachers, students and residents gather at the steps of the Alaska State Capitol on Jan. 23 in advocacy for an increase in the state’s flat funding via the base student allocation, which hasn’t increased sizeably since 2017 and has failed to keep pace with inflation during the past decade. A one-time funding increase was approved during this year’s legislative session. (Clarise Larson / Juneau Empire file photo)
What’s next for the most debated bills pending in the Legislature?

Education funding increase, “parental rights” and other proposals will resurface next year.

Emergency lights flash on top of a police car. (Ben Hohenstatt / Juneau Empire File)
Police investigate assault in Lemon Creek area

“JPD does not believe there is any danger to the public at large.”

Florida Gov. Ron DeSantis speaks at the Conservative Political Action Conference (CPAC), Feb. 24, 2022, in Orlando, Fla. DeSantis has filed a declaration of candidacy for president, entering the 2024 race as Donald Trump’s top GOP rival (AP Photo / John Raoux)
Florida Gov. Ron DeSantis launches 2024 GOP presidential campaign to challenge Trump

Decision revealed in FEC filing before an online conversation with Twitter CEO Elon Musk.

(Michael Penn / Juneau Empire File)
Police calls for Wednesday, May 23, 2023

This report contains information from law enforcement and public safety agencies.

A channel flows through the mud flats along the Seward Highway and Turnagain Arm in Alaska on Oct. 25, 2014. Authorities said, a 20-year-old man from Illinois who was walking Sunday evening, May 21, 2023, on tidal mud flats with friends in an Alaska estuary, got stuck up to his waist in the quicksand-like silt and drowned as the tide came in before frantic rescuers could extract him.  (Bob Hallinen / Anchorage Daily News)
Illinois man gets stuck waist-deep in Alaska mud flats, drowns as tide comes in

“…It’s Mother Nature, and she has no mercy for humanity.”

Most Read