Do Alaskans still get checks each year from the oil reserves in the state? How does this work, both on generating the money and distributing it? Does it amount to much?
It is called the Alaska Permanent Fund Dividend and was enacted in 1982. It is still alive and looks like it will be as long as we are drilling oil. The link only goes back to 2005, though in explaining the dividend amounts.
Side note: The Alaskans seem to want to allow drilling in their state. I would guess the more drilling, the more oil, the more money.
Yes, we still stand in line with our hands out. Every man, woman and child who is a resident gets a check, as do many who are not residents but who lie about it. Last year it was about $900. It’s gone as high as nearly $2000. It’s based on return on investment on the corpus over the past five years. It’s not worth moving here for, since you can’t live on it, but public housing is full of people who thought otherwise.
Thanks. But without digging through the info, can you explain what the rational is for the dividend? Lots of states have resources on public lands, so I’m just wondering how this got started and what the policy rationale is for it. I’m not aware of similar funds in other states, or are there?
The oil is on public land. Therefore, the state grants the oil companies the right to drill for oil on public land, and the oil companies pay a royalty on every barrel pumped.
The royalty money goes into the permanent fund. The permanent fund money is invested. Half the investment income goes back into the permanent fund, the other half is distributed to each Alaska resident (including minors).
This was set up because it was feared that if the money went into general revenue that it would be stolen, given away, and pissed away by the legislature. Other states might have money from natural resource royalties, but not nearly this large an amount, especially compared to the tax base of the state.
So the Permanent Fund has a semi-sacred status in Alaska, and is considered untouchable. Any politician who proposes cutting the dividend checks is putting his dick in a meatgrinder.
The bottom line is that the state can charge the companies royalties and Alaska oil is still competitive on the market. Every foreign country that has oil takes a chunk of the money in one way or another. Therefore the process does not price Alaskan oil out of the market.
Well, the state can set whatever royalties it wants. Set it too low and you get nothing out of the deal except “jobs”. Set it too high and the oil companies won’t bother to search for more oil because they won’t be able to make a profit. Most oil producing countries have a single state-owned oil company that is answerable to the rulers rather than to stockholders.
Right on the nosey.
Great summary Lemur. Putting those primate thumbs to good use on the keyboard I see.
So does the state negotiate the royalty with the companies? That must be a major lobbying/campaign contribution/election nexus.
Yes, but in the case of Prudhoe Bay, that was all done long ago and is not a campaign issue. In the minds of many, the state rolled over way too quickly and we all got screwed. I tend to agree, since we still have the vast majority of Natives in villages shitting in buckets.
The present political football is the natural gas pipeline. There are several camps, of course. One would like the pipeline to be an ‘all-Alaska’ line, with spurs to feed Alaskan stoves and furnaces with cheap gas. Another wants a trans-Canada line, which would probably be cheaper to build. Don’t look for either for another ten years or so.