March 5, 2026, Seward Folly

Opinion column by Larry Persily, Wrangell Sentinel

Just as Russia’s invasion of Ukraine in 2022 drove oil prices higher — over $100 a barrel for several months — so, too, are the U.S. and Israeli attacks on Iran, and Iran’s counterattacks, sending prices upward.

Higher oil prices mean more money for the Alaska state treasury. After the annual draw on Permanent Fund earnings, the money from oil taxes and royalties, which are based on price per barrel and production, are the second-largest deposit to the state checkbook. Every other taxpayer is so small as to be a drop in the barrel.

Rising oil prices come as legislators are working to craft a spending plan for the fiscal year that starts July 1. They will devote March and April to putting together the pieces, then trading and negotiating and making decisions before their mid-May adjournment deadline.

No question there is a long list of projects, programs and proposals for spending any additional oil money that flows our way. This is Alaska, where we like to spend almost as much as we like to fish, count airline miles and talk about how the wet cold of Southeast is worse than the dry cold of Fairbanks.

Going into the session, Alaska North Slope oil prices were flirting with $65 a barrel, maybe just barely enough to fully cover next year’s spending on public services and a $1,000 Permanent Fund dividend, but short several hundred million dollars to cover this year’s budget gap. There was no money to spare, no matter how great the need.

Even the outlook for additional funding for education — with increasing school closures, staff cuts and larger class sizes — looked bleak.

But with last weekend’s outbreak of war in the Middle East, oil has climbed past $80 a barrel. Analysts expect prices could keep climbing until there is peace and oil shipments return to normal in the region. And that could take time — in this case, time is more money for the state treasury.

The Alaska Department of Revenue December 2025 forecast book shows that the difference between $65 and $80 a barrel over an entire year is about $500 million more to the state treasury. Or, thinking more short term, about $40 million a month to the state. At $90 a barrel, it’s close to $80 million in additional cash each month.

The point being that Alaska is about to see more money coming in than it had expected a week ago. But how high it can go and how long it can last is guesswork. That’s why caution is important.

In spring 2022, when oil prices shot up to $120 a barrel, the state treasury was looking pretty fat to legislators — and voters — in an election year. The Legislature, with the governor’s support, spent more than $2 billion on an extra-large PFD of $3,284 per person — almost double the spending on K-12 public education. They called part of it, $662, “energy relief,” intended to help Alaskans pay the more expensive bills for gasoline and heating fuel that accompany rising oil prices.

It’s an election year again, and oil revenues to the state now look to be higher than expected. Which means there will be heightened interest in using some or much of that money to fatten the PFD for this fall.

But Alaska could see longer-term benefits from the short-term influx of dollars if the money goes toward schools, the university, job training, roads and harbors, foster care, child care and elder care.

The dividend is one option, but it shouldn’t be the first and only option.

Larry Persily is a longtime Alaska journalist, with breaks for federal, state and municipal public policy work in Alaska and Washington, D.C. He lives in Anchorage and is publisher of the Wrangell Sentinel weekly newspaper.