ANS oil prices, which as most will recall drive 90% of the Alaska state government revenue, fell again Wednesday to $82.16 per barrel.
The current state budget, which already was $1.6 billion in the red when it passed, is predicated on oil prices averaging $105 per barrel. (The breakeven price for the budget is roughly $117 per barrel.)
Each dollar change in the price of oil is equal to roughly $90 million in state oil revenues. That means if oil prices for the year settle at $95/barrel, the budget deficit will grow to $2.5 billion, at $90/barrel to something approaching $3 billion, and at $85/barrel to something on the order of $3.4 billion. Continue reading