newsminer.com

With oil prices at the lowest level in 13 months, Alaska’s leaders will need to pay more attention to the dollars flowing in and out.

The summer dreams of nearly inexhaustible surpluses have ended, with oil dropping to the $80 range, down from a high of $145.

We probably won't have to worry about surpluses in the $12 billion to $18 billion range.

We may not have to worry about a surplus at all.

To balance its budget this fiscal year, the state needs an annual average oil price of about $83 per barrel. Oil prices slipped below $80 Friday.

What is seen Outside as the "silver lining" from the stock market collapse is bad news for the Alaska economy, which runs on oil money, much of it filtered through state and local government channels.

To some extent, the silver lining applies here, at least in terms of lowering the price of gasoline and heating fuel, though the downward movement is as slow as pouring a quart of 30 weight motor oil at 40 below.

The Associated Press reports that lower oil prices have led to a continued decline in gasoline prices in much of the country.

“Underscoring Americans’ waning appetite for fuel, a gallon of regular gasoline dropped 5.3 cents overnight to a new national average of $3.35 a gallon, according to auto club AAA, the Oil Price Information Service and Wright Express," the AP said Friday.

“Prices dipped below $3 a gallon on average in Kansas, Missouri and Oklahoma. If crude keeps falling, the rest of country should see sub-$3 gasoline in the next few weeks if not sooner, experts say.”

In Fairbanks, gasoline prices recently dipped —at some places — about a dime below $4 a gallon.

When I last wrote about this at the start of September, oil prices were $115 per barrel.

Had the price remained at that level, the state would have collected about $12.9 billion in the fiscal year that continues until the end of next June, state revenue officials estimate.

The budget for this year is $7.2 billion, which includes savings in the form of $1.3 billion stashed away in the Constitutional Budget Reserve and other measures.

The spring revenue forecast was based on oil at $83.04 per barrel and revenues of $7.1 billion, so income and outgo would be about even at that price.

With oil at $70, the state would take in about $5 billion. If that price goes to $80, income would rise to about $6.5 billion.

When oil prices go from $80 to $81, state revenue increases by about $158 million, so small movements in the price have a big impact.

The change is not linear. When oil prices go from $75 to $76, for instance, the state increase is $149 million.

Of course, this also works the other way. A drop from $81 to $80 costs the state $158 million.