America’s Last Frontier is in trouble. The 40-year oil boom that turned Alaska from a frigid backwater into one of the nation’s richest states is over. Not only have petroleum prices crashed, but Alaska’s supply of crude is running out. Thirty years ago the state was pumping 2 million barrels a day, a quarter of all U.S. output. But over the past decade, the Prudhoe Bay oil field, once the largest in North America, has started to reach the end of its life. Alaska’s output has fallen to 500,000 barrels a day, enough to fill only one-quarter of the capacity of the state’s main economic artery, the 800-mile Trans-Alaska Pipeline System.
With 90 percent of the general fund revenue tied to oil, the collapse has been devastating. Alaska, facing a $4 billion budget deficit, is one of four energy states that have slid into recession over the past year because of cheap oil. The state’s rainy day fund is burning through $11 million a day. If that keeps up, it will be out of emergency funds within two years.
The article goes on to point out that Governor Bill Walker is stuck with the unenviable tasks of trying to fix a problem that the last two governors Parnell and Palin pretended did not exist.
To do it Walker will undoubtedly have to tap into the Permanent Fund account, the recognized third rail of Alaska politics. And possibly reintroduce state income taxes, which might lead to an open revolt within the state.
Whatever Walker does it will no doubt signal the end of his political career in Alaska. And that is really a shame because he is now making the hard choices that his predecessors should have made years ago, and simply refused.