= Mike Miller, 80 K = Gail Phillips, 99 K = Gene Therriault, 26 K =
Mark Hanley, 20 K = Drue Pearce, 151 KAlaska
State Legislature
News from the Senate and House Majorities
Wendy Lindskoog, (907) 465-4582
Jerry Ritter, (907) 465-3804
State Capitol
Juneau, AK 99801
http://www.akrepublicans.org
Actuality Line: 1-800-478-6540
Revenue Summit: Lean Years Ahead
Experts Say Oil Prices Will Hover Near $13 Mark
For Immediate Release: March 10, 1998 Contact: Stephanie Szymanski at (907) 465-4993 or Tom Maher at (907) 465-4939.
Juneau – According to oil revenue experts who participated in Tuesday’s Revenue Summit, oil prices show little sign of making a comeback anytime soon. In an effort to define the parameters surrounding the FY 99 budget debate, Legislative Leaders scheduled the Revenue Summit to gather information regarding revenue projections and assess whether world markets may be experiencing a fundamental shift downward in the long-term price of oil.
Senator Drue Pearce, Co-Chair of the Senate Finance Committee, said today’s Alaska North Slope (ANS) Crude prices opened at $11.70 per barrel. "We haven’t seen oil prices this low in more than four years. This leads me to believe we need to continue to err on the conservative side in terms of budgeting. These prices reinforce the need to stay the course of our Five Year Plan as we work to close Alaska’s spending deficit. And we need to protect – as much as possible – the balance in our State’s savings account, the Constitutional Budget Reserve."
There is no sign the price of oil will rebound in the coming two years according to Peter Bogin, from the Cambridge Energy Research Associates, and Douglas M. MacIntyre from the U.S. Department of Energy. Bogin and MacIntyre are nationally recognized revenue experts who shared their perspectives on the world oil market and revenue projections of oil prices for both the short and long term.
Bogin told lawmakers that for budgeting purposes, they should look at a $13 to $13.50 per barrel price for 1998-99. He then said the price may increase by only 50 cents to $1 by the year 2000. The long-term outlook calls for the price to rise to the $16-$17.25 range by the year 2010. For comparison’s sake, a year ago the price was over $23 per barrel. The State FY98 budget was based on $18.44 per barrel price of oil.
The budget the governor submitted at the beginning of the year for FY99 was based on a price of $17.81 per barrel for oil.
"If we accepted the governor’s spending proposals for this year and next, we would draw down the Constitutional Budget Reserve over $1.3 billion dollars," said Representative Mark Hanley, Co-Chair of the House Finance Committee. "That’s almost half of its current value."
"Given the serious impact today’s low oil prices will have on our state budget, it is unfortunate the Governor did not attend the Summit," said Senate President Mike Miller. "The picture does not look good for Alaska. Thank goodness we put the Republican-led Majority’s Five-Year plan into place in 1996. We have reduced state spending by $130 million in two years."
"The governor’s message to Alaskans is ‘Don’t worry. Be happy. Let’s spend our way out of this’," said Pearce. "He’s promised every special interest group a new program with no regard to fiscal reality. I’m amazed because the governor stated:
‘Without question, Alaska needs to live within its means. It is irresponsible for us to continue spending our children’s future needs to pay for today’s wants.’
Governor Tony Knowles: November 6, 1995
"What happened to his budget discipline?!" Pearce asked.
"We’re looking for programs that work, programs that have shown results and accountability," Pearce said. "We have spent money and begun a lot of new programs in the past three years at the governor’s request because we were told they would save money in the future. So far, we haven’t seen much evidence that these programs work – let alone save money."
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Broadcast Note: Radio
Actualities are available by calling 800/478-6540.
= Mike Miller, 80 K = Gail Phillips, 99 K
= Gene Therriault, 26 K =
Mark Hanley, 20 K
= Drue Pearce, 151 K
Note: Cambridge Energy Research Associates is an independent firm providing insight into the energy future. The firm specializes in energy markets, geopolitics, and strategy.