Who is enjoying the skyrocketing oil prices? And what will he do with the money?
Thanks to skyrocketing oil prices, one oil state, Alaska, is reaping billions of dollars in windfall revenue. With the rise in crude oil in recent months, this state has received billions in extra revenue that the authorities are now trying to decide what to do with it. Just before Russia invaded Ukraine and caused oil prices to soar, the Alaska Department of Revenue began developing a monthly revenue statement for politicians to properly decide what to do with it.
In mid-February, oil prices were roughly $ 10 a barrel higher than the state's estimates for revenue made in the fall of 2021. Juneau, the state's capital, has seen its coffers fill unexpectedly and with prices hovering around 80-90 dollars. Let's imagine that now they can't even close the chests anymore …
Soaring oil prices are a boon to the state of Alaska, which is heavily dependent on oil revenues for its budgetary needs. The price of Alaska North Slope (ANS) crude rose from $ 90.56 in early February to $ 114.93 a barrel on March 24.
A boon to Alaska's coffers, but also the cause of a debate in the state about how to best spend the unexpected surplus revenues, considering the uncontrolled inflation affecting household income and the highly unpredictable nature of oil revenues.
Alaska Governor Mike Dunleavy wants as much as possible of the huge oil revenues of these days to go into funds to spend for times of recession, to insulate the state budget as much as possible from future oil price collapses. On the contrary, the Dems would like to spend it to cope with rising prices or sources for education.
According to the Alaska Department of Revenue's Spring 2022 revenue forecast, bumper oil revenue stands at $ 3.6 billion for this year, and the figure is expected to be similar next year as well.
"Rising oil prices are benefiting government finances and harming Alaskans," Governor Dunleavy said in mid-March. Part of the money from the mining rights goes to the Permanent Dividend Fund which pays a kind of permanent dividend to each individual citizen.
The oil funds provide a cash flow of $ 1114 for each citizen. With this extra money, the state could distribute as many as $ 3,200 per citizen. The figure is starting to be a tidy sum.
The alternative to distributing the money through the PFD is to accumulate it. "Over the next 10 years, we can have surpluses while we pay the PFD," Governor Dunleavy said. "We can also rebuild our savings with these surpluses of the order of $ 11 billion over ten years, based on a conservative forecast of over $ 70 a barrel through 2031."
Commenting on the unexpected benefit to Alaska's finances, Governor Dunleavy told the Wall Street Journal in an interview:
" The more money you put into people's hands, the better they will spend it than the state ." Because the idea is precisely this: instead of useless investments, perhaps stupid, such as the PNRR, better to give them to citizens who will spend them anyway better than the state can do. because they don't have the piddini who want to waste them, in Alaska. Imagine if even in Italy we exploited resources adequately, instead of not extracting them.
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The article Who is enjoying the skyrocketing oil prices? And what will he do with the money? comes from ScenariEconomici.it .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/chi-sta-godendo-per-i-prezzi-altissimi-del-petrolio-e-cosa-se-ne-fara-dei-soldi/ on Tue, 29 Mar 2022 08:00:49 +0000.