The production of North Slope oil went into permanent decline a few years after the peak of the giant Prudhoe Bay field in 1988. However, the recent rise in oil revenue due to skyrocketing crude oil prices has for now compensted for the production delcine, and has been a "blessing" for Alaskans.
All Alaskans receive a payment each year (called the Permanent Fund Dividend, or "PFD") from the royalties the state makes from it's oil wealth. Everyone, including minor children, will probably receive a little over $3,000 in September, because in addition to the $2,000 PFD, Gov. Palin got the legislature to approve a one-time $1,200 energy rebate to each PFD stipend to cover high energy costs. (Plus, she got the legislature to eliminate the fuel tax for one year.) This is important to Alaskans, because total energy costs - heating and transportation fuel - are a big budget item.
More below the fold...
An Alaskan family of 6 (parents and 4 children) will receive about $18,000 this year from the state. In spite of that, the last I heard was that Gov. Palin's ratings have dropped fom 80% to about 67% at the moment.
Sarah Palin became governor of Alaska by by campaigning against corruption and promising to cut government spending - a good thing since at the time, since oil revenues were declining. ( I have not researched the details, but I am guessing that for a few years, other Alaskan fields compensated for the loss of production at Prudhoe Bay after it's 1988 peak.) The PFD payments to Alaskans and their families had been declining for seven years. After Palin was elected governor, oil prices rose at a rate that more than compensated for the production decline. I will leave it to others to fill in the gaps and flesh out the intricacies of the relationships between timing, Palin's governing, and oil prices, but at first glance, it appears that the dice came up strongly in her favor. Considering her financial boondoggle with the construction of a new sports complex as Wasilla's mayor, I have to believe that good fortune, not good governing, was the key to Palin's current (though declining) popularity with Alaskans.
Considering the many years it would take to bring ANWAR on line to replace the steadily declining output or Prudhoe Bay and other current North Slope oil fields, you can see why all Alaska politicians have to be in favor of drilling there to get in and stay in office.
Here's the history of the royalties from the North Slope oil fields as paid to the people of Alaska:
Alaska Governor Sarah Palin Announces 2007 Permanent Fund Dividend - $1,654 Per Eligible Alaskan
The Anchorage Daily News has just reported that Governor Sarah Palin has announced that the 2007 Permanent Fund Dividend (PFD) for each eligible Alaskan will be $1,654, a large jump from 2006 and the fourth highest payout in history. This represents each eligible Alaskan's share of the state's oil riches, derived from the state's oil royalty investment program. A similar program is envisioned if and when the natural gas pipeline is built. Those who chose to receive via direct deposit will get their dividend as early as October 13th; those who chose "snail mail" will receive dividends as early as November 13th.
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All members of an Alaskan family, including minor children, are eligible. Parents fill out the applications on behalf of their kids. So, based upon this year's announced dividend, a family of four could get around $6,400. That's not exactly chump change.
Here is the history of individual PFD payouts:
2006 $1106.96
2005 $845.76
2004 $919.84
2003 $1107.56
2002 $1540.76
2001 $1850.28
2000 $1963.86
1999 $1769.84
1998 $1540.88
1997 $1296.54
1996 $1130.68
1995 $990.30
1994 $983.90
1993 $949.46
1992 $915.84
1991 $931.34
1990 $952.63
1989 $873.16
1988 $826.93
1987 $708.19
1986 $556.26
1985 $404.00
1984 $331.29
1983 $386.15
1982 $1000.00
The Permanent Fund is also known as the "third rail" of Alaska politics. Woe betide any candidate who proposes to reduce the share to the public, no matter what the greater public interest might justify.
Having watched many of the videos of Palin up through interviews with her as governor (these are now available on the internet at YouTube and other sites), I am not impressed with Palin as anything more than a local PTA Mom, sportscaster and small time politician with a tendency to lean - with heavy-handed and amateurish tactics - on those who dare cross her. When someone takes the time (either in the blogosphere or MSM) to do a comprehensive review of Palin's political career, personality and the influences that shaped it, I think we will see someone who is definitely not ready to be "a heartbeat away" from leading a nation of 300 million people and go toe-to-toe with world leaders.
I will watch with fascination as the chess game of our Democratic Party leaders try to counter this weird and challenging turn that the presidential campaign has taken.
Dave
(Suggestions regarding tags are welcome.)
Update [2008-8-31 23:18:55 by DaveVH]: Apparently, the permanent fund dividend is based on a five year average of the fund's performance, and new revenue is provided by royalties on all natural resource extraction. Therefore, without doing additional research (which looks to be complex), I would guess that the stock market boom prior to 2 years ago, and the addition of huge new revenues from oil the past two years are major factors in the big payouts last year and this year. Increased oil and other mineral royalties would seem to compensate for other investment losses. If there is an Alaskan Kossack out there who understands these intricacies, and is willing to contribute to this discussion, please jump in. Snarky putdowns are not very helpful to our community.
Bottom line, I would guess that oil royalty income is important to the PFD, and will continue to be important.
Can anyone explain why the drop in PDF Dividends seem to track North Slope oil depletion, with the 5-year average seeming to be a factor in the dividend falloff in the 1990's?