Alaska's future was forever changed after the first barrel of oil traveled down the Trans Alaska pipeline in 1977. Understanding the inextricable link between Alaska's economy and oil price is key to designing effective public policy that adequately addresses the precarious economic position stemming from an over-dependence on oil and gas. Moreover, because of the omnipresent threat posed by climate change, regions like the Arctic and states such as Alaska are warming at 2-3 times the global average, resulting in a disproportionate impact on the people and communities of the north (Coggin, 2019). Overwhelmingly, scientists agree that greenhouse gas (GHGs) emissions are a result of anthropogenic activity&emdash;in part stemming from fossil fuel combustion. Alaska faces a unique paradox: oil and gas production is a significant driver of economic performance, but at the same time, the very combustion of that resources poses an longterm existential threat to its people, geography, and fiscal stability. This paper seeks to analyze the influence of Alaska North Slope crude price on Alaska's economy and how public policy solutions may help mitigate this erratic relationship. Because oil prices fluctuate and have at times resulted in significant windfalls to the state treasury&emdash;leading to a $70+ billion-dollar sovereign wealth fund and more than $180 billion since the state's inception&emdash;policy makers haven't had to make difficult decisions on raising revenue. However, since oil royalties&emdash;that once provided nearly 90% of state revenue&emdash;plunged to providing only 40% of state revenue, Alaska has run billion-dollar deficits and now faces an inflection point, in which policy makers will have to make controversial choices (McDowell Group, 2020). Alaska is not immune to the politically polarizing environment found across the United States. Because of political polarization and electoral concerns, the legislature has remained divided on several key issues, such as: revenue-raising mechanisms and whether oil should remain the focal point of the state's economy for decades to come. As this project demonstrates, Alaska's economic future is at stake and policy makers need to work collaboratively to ensure Alaskans aren't left behind as climate change and its economic impacts become a reality.
Blackwell, Jackson, "Alaska's Oil Paradox: Exploring the Relationship Between North Slope Crude Price & Economic Performance" (2021). 2021 Undergraduate Research Showcase. 8.