At a time when the world is relishing the nosedive in global oil prices, the oil-rich state Alaska seems to be facing with some dire strait. The state is likely to see budget cuts following the recent plunge of oil prices.
The North Slope crude was priced at USD 107 a barrel as of April 2014. But earlier this week, the crude price was slashed by more than half. This has further led to many good things for consumers in most of the parts of the country, but the states like Alaska that majorly depends on generating revenue from oil, the tumbling prices of crude has resulted in an 80 percent drop in the production tax share of the state on a year-over-year basis.
Alaska Governor Bill Walker is considering himself among those who are pushing for potential cuts in this year’s budget for the state, while tapping into the oil wealth fund of Alaska, along with other contingency measures.
According to the market experts and economists, Alaska is a US state where booms and busts of the crude oil have stood advantageous and detrimental respectively, to the economy of the state. For instance, the high oil prices had protected the state in 2007-08 from the great recession when the rest of the US as well as most of the world economy were facing the brunt of financial meltdown.
Meanwhile, some economists hold optimistic outlook for Alaska as they believe the state has a more mature economy this year.
The financial experts said that Alaska seems to be trying its level best to not tap excessively into the state kitty. They further said that it is very essential for the state lawmakers to take final call on the budget matters in order to avoid depending too much upon the savings of the state. Alaska’s Permanent Fund possessed USD 7.5 billion in its account as of the end of November 2014.