The average price of a barrel of Alaska North Slope crude oil in October was $122.21, according to figures published Nov. 2 by the Alaska Department of Revenue, triggering a windfall of tax and royalty payments to the state treasury.
That figure is the fifth-highest nominal monthly average on record, according to the department’s tracking report, and foretells hundreds of millions of dollars in additional revenue for the state in the current fiscal year.
Only three months in 2008 and the month of March 2012 had higher average values, though, adjusted for inflation, the October average ranks significantly lower.
Oil revenue typically pays for about one-third of Alaska’s annual general-purpose spending, and higher prices means more money will be available for public services, the Permanent Fund dividend and savings when state legislators reconvene in January.
Higher prices, however, also mean that individual Alaskans and businesses are paying substantially more for heating fuel, gasoline and diesel, particularly in rural communities where fuels are barged or flown into town.
This spring, the department forecast that North Slope crude would average $75 per barrel in Fiscal Year 2027, which runs from July 1 of this year through June 30, 2027.
Instead, prices since July 1 have averaged $98.13 — almost 25% higher than expected. Oil production in FY27 has been almost 7% below the forecast, but that also appears to be changing. In October, the North Slope averaged 524,446 barrels of oil per day, the highest monthly average so far in FY27, as the new Santos-led Pikka project ramped up production.
The difference between the $75 forecast price and the year-to-date average of $98 would generate about $1 billion in additional tax and royalty payments to the state treasury if the $98 average holds to the end of the fiscal year on June 30.
The month of October alone, at its $122 average, was worth an additional $200 million to the treasury for just that one month.
Global oil prices have stayed persistently high this fall, analysts and traders say, because Chinese oil demand has rebounded from summer lows and because the market fears a renewed escalation of violence in the Middle East.
The price on Nov. 5 was down to $113.58 a barrel on market hopes of a de-escalation of the U.S.-Iran war.
In an additional boost for the Alaska treasury, North Slope crude is selling at a steep premium to the global benchmark Brent crude, thanks to U.S. West Coast and Pacific Basin refiners willing to pay a premium.
In October, buyers were willing to pay an average of $13.91 more for a barrel of Alaska North Slope oil than for a barrel of Brent, the largest premium since May and one of the largest in history.
“The premium reflects tightness in the Pacific basin, where ANS trades,” said Aimee Bushnell of the Department of Revenue, on Oct. 22.
Last year, Middle East producers supplied more than 20% of the imported crude fed into U.S. West Coast refineries. Reduced supply from Persian Gulf nations is driving up the price that refiners are willing to pay for what is available on the market.
Canada last year supplied about 30% of the imported crude for U.S. West Coast refineries, with 40% coming from South American producers Brazil, Ecuador, Argentina and Guyana.
Looking at total feedstock into California and Washington state refineries, Alaska supplied about 20% last year, with almost 15% from California and with imports outpacing domestic crude by almost a 2-to-1 margin.
Larry Persily of the Sentinel and Yereth Rosen of the Alaska Beacon contributed reporting for this story. The Alaska Beacon is an independent, donor-funded news organization, online at Alaskabeacon.com.
