 Even at higher prices, Budget Reserve Fund could run out June 2005 November 27, 2002
"Considering OPEC's success at maintaining world prices within its target range the past few years, we expect North Slope crude to average $22 a barrel in future years, significantly ahead of the past long-term average of around $17.50 a barrel," Commissioner Wilson Condon said in announcing the semi-annual state revenue forecast. ANS crude is projected to average $25.94 a barrel in Fiscal 2003, as the possibility of war with Iraq keeps prices high. The Revenue Department forecasts ANS at $23.25 in Fiscal 2004 as prices gradually slide back to a long-term average of $22. "But even with a higher long-term outlook for ANS prices, the state still faces a large gap between its revenue and the cost of providing public services," Condon said. "We expect the Constitutional Budget Reserve Fund to run out of money in June 2005." The draw on the Budget Reserve was $738 million last year, with an estimated $747 million draw this fiscal year and $896 million in Fiscal 2004. The projected draw of $1.029 billion in Fiscal 2005 would empty the account, unless the state finds new revenues or takes other steps to reduce the fiscal gap, the commissioner said. North Slope production is slipping a bit, Condon said, and is expected to hold just under 1 million barrels a day this year through Fiscal 2007. "Future production is predicated on sufficient private investment, and reasonable public fiscal policies, to attract the exploration and development capital needed to find and produce more oil from Alaska's North Slope." The Fall 2002 Revenue Sources Book also includes a special section on oil and gas opportunities in Alaska. "The purpose of this section," Condon said, "is to educate Alaskans on the issue and to explain the possibilities for new developments and the costs behind turning them into realities." This will be Condon's last revenue forecast as commissioner. He will leave office December 2. "I have given you our best estimates, our wisest projections and our most knowledgeable forecasts 16 times since 1995. I would like to think we have been right more times than not."
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