The Friday Alaska Landmine column: All the charts
This week, we summarize the 18 other charts Alaskans for Sustainable Budgets regularly produces on a daily, weekly, monthly, and quarterly basis related to Alaska oil and fiscal policy
While some may know us primarily or even only through these weekly columns, they represent only a small part of the work we do on an ongoing basis. Not counting those included in these columns, we regularly prepare and produce 11 sets of charts weekly focused on Alaska oil and fiscal policy. Beyond that, we produce another six sets monthly and one quarterly.
The purpose of this week’s column is to outline what they cover and, if you don’t already, to invite you to follow one or more of them. You can find them posted regularly on our X (formerly Twitter), Threads, Mastodon, and Facebook pages or on our website, AKforSB.com.
As a baseline, we prepare and post daily (except Sundays) an update of average Alaska North Slope (ANS) oil prices over the past six years, current ANS, Brent, and West Texas Intermediate (WTI) oil prices year-to-date, plus projections of those prices over the remainder of the current fiscal year and the next six years following based on current futures markets prices. For comparison, we also include the forward-looking price projections from the Department of Revenue (DOR) included in the most recent revenue forecast, and from the Federal Energy Information Administration’s (EIA) monthly Short-Term Energy Outlook (STEO). The following is the most recent daily chart at the time we are writing this week’s column.
We complement those daily charts with a series of weekly charts, at least one of which updates every day of the week except Tuesdays when we are busy instead recording and publishing our weekly podcast, which is posted on the same social media channels as the charts.
Starting the week, we update and post two sets of charts on Sundays. The first provides an update on loadings and deliveries made by the tankers transporting ANS oil from Valdez primarily to US West Coast markets but occasionally also to Asia (primarily China). The data from that chart helps us and others better understand what the most important markets are for ANS currently and the competitive characteristics that help influence its price. The most recent chart is here.
The second set of Sunday charts focuses on two financial issues. The first chart follows the current inflation rate as measured by the national Consumer Price Index, together with the current market assessment of the outlook for near and longer-term inflation as measured in the market for Treasury bills and bonds. The second chart tracks current Treasury (risk-free) bond yields at various maturities. We use the data from those charts primarily in evaluating and preparing Alaska budget outlooks and as a tool for assessing potential costs when attention turns to issuing General Obligation (GO) bonds to finance new spending. The most recent set is here.
On Monday, we update and post a chart that tracks the current and futures markets for liquified natural gas (LNG) at its major global pricing hubs: the Japanese Korea Marker (JKM), the Title Transfer Facility (TTF) in the Netherlands, the National Balancing Point (NBP) in the UK and the Henry Hub price in the US. We then compare those prices to the current cost of gas embedded in Enstar’s rates, adjusted looking forward for inflation. We originally started the chart to help assess the market environment for potential deliveries from the Alaska LNG project. As the Southcentral energy situation has developed, however, we have come to look at the data increasingly over time more as an assessment of the potential delivered cost of LNG into the Cook Inlet. The most recent chart is here.
On Wednesday, we update and post a chart that tracks the current US West Coast oil supply and demand balance. While the chart doesn’t tell us anything specifically about Alaska, it does provide a useful overview generally of what’s going on in the West Coast oil market, which is the most important outlet for Alaska’s oil, particularly including insights into how the market has changed since COVID (the market has both shrunk and increasingly become dependent on imported crude supplies). The most recent chart is here.
On Thursday, we focus on current ANS production levels and how they are progressing compared to the production levels included in the most recent DOR revenue forecast on which the current year's budget is based. While attention in tracking the progress of actual ANS oil revenues against the levels projected in the latest DOR forecast usually focuses mostly on current and projected oil prices, production volumes also play a significant role in that equation. We use the input from this chart in two subsequent weekly charts that focus specifically on comparing current overall traditional revenues against projections. The latest Thursday chart update is here.
We update and post a number of charts Friday related to the Alaska budget outlook. The first set, published Friday mornings, compares the projected oil prices and revenues included in the most recent DOR 10-year revenue forecast against the prices (and, from that, the revenues) currently prevailing in the oil futures markets. The most recent set is here.
Using the data from that, we then post a number of additional charts on Friday afternoons. The first looks at the budget outlook over the 10-year projection period used in the most recent DOR revenue forecast. As part of that chart, we also update the outlook for the Legislature’s annual percent of market value (POMV) draw from the Permanent Fund based on the most recent projections made monthly by the Permanent Fund Corporation (PFC), as well as for projected unrestricted general fund (UGF) spending levels based on the Legislative Finance Division’s (LegFin) most recent projections.
Because the budget outlook remains in substantial, ongoing deficits, we then include four additional charts that look at the distributional impact on Alaska families (by income bracket) of closing the deficits through four alternatives: (1) a flat tax (in lieu of cuts in the Permanent Fund Dividend (PFD)), (2) restructuring the PFD to 50% of the POMV draw (the so-called POMV 50/50 PFD approach) and closing the remaining deficit through a flat tax, (3) restructuring the PFD to 25% of the POMV draw (the so-called POMV 25/75 PFD approach) and closing the remaining deficit through a flat tax, and (4) closing the deficit entirely through PFD cuts (the so-called “leftover” PFD approach). The most recent set of the Friday afternoon charts at the time we are writing this week’s column is here.
On Saturday, we post two sets of charts. The first chart combines the latest daily pricing forecast with the Thursday look at production levels to provide a detailed look at how projected current-year revenues compare to the most recent DOR revenue forecast. We do this chart because a simple pricing average - based on current and projected prices over the 12 months - misses the impact of variances in production levels. By melding the pricing and production outlooks, we gain some additional insight into where oil revenues are headed over the year.
The second chart in that set takes the output from the first and compares it to the “waterfall” levels established in the most recent appropriations bill. For the last couple of years, the Senate has structured the final appropriations bill with “waterfalls” at certain points. As explained in LegFin’s most recent newsletter, the projected points in the FY25 appropriations bill passed and signed by the Governor this past spring are $78, $81, and $94/bbl.
The budget is based on a projected price of $78/bbl. As the following chart indicates, additional revenues between that point and a realized oil price of $81/bbl are retained as unrestricted general funds, available for additional appropriation as part of the supplemental budget. Under the bill as enacted, additional revenues between $81 and $94/bbl are to be split 50/50 between the PFD and the Constitutional Budget Reserve (CBR), with any additional revenues beyond $94/bbl fully deposited in the CBR. The chart tracks weekly where current projected revenues sit in the waterfall. The most recent set of the Saturday morning charts is here (note the correction in the comments).
On Saturday afternoons, we routinely post one additional chart that looks at a 4-week running average of the prices for ANS, Brent, and WTI and the differentials between them to better understand the relationships. We use the ANS/Brent differential to project monthly and current-year ANS prices, which are included in our daily and other charts. The latest Saturday afternoon chart is here.
Regularly, at the end of each month, we prepare three sets of charts related to oil. The first summarizes the information from the weekly Sunday ANS tanker charts into full-month and running 13-month looks, which enables us and others to see longer-term trends in the supply of ANS to the various markets into which it is delivered. The most recent set is here.
The second uses monthly EIA data to look at the share of the US West Coast oil market served by Alaska and other suppliers and the portion of Alaskan supplies exported internationally (mostly to China). The most recent look at the shares of the US West Coast market being supplied by Alaska and other suppliers is here. The most recent look at the portion of Alaskan supplies being exported internationally is here.
The final monthly chart related to oil looks at the running 12-month averages for ANS, Brent, and WTI oil prices and differentials to better understand the longer-term relationship between them. We use the ANS/Brent differential to project longer-term ANS prices based on the Brent futures market. The most recent chart is here.
As the data becomes available, we also prepare three sets of charts monthly related to Alaska’s fiscal situation.
The first set is composed of four charts. Based on monthly updates by the PFC and the Alaska Retirement Management Board, the first updates the balances for the state’s two major investment funds, the Permanent Fund and the PERS and TRS retirement fund. The second chart then breaks down in greater detail the portion of the Permanent Fund held in the Fund’s Earnings Reserve Account (ERA), as currently reported by the PFC.
For the reasons explained in earlier Alaska Landmine columns, however, we believe the current PFC financial statements significantly understate the level of realized uncommitted ERA funds. To correct for that, the final two charts in the set restate the amount separately on a current and forward-looking basis over the full 10-year projection period used in the most recent DOR revenue forecast. The latest set of these charts is here.
Again, based on monthly PFC updates of projected earnings and balance levels, the second set focuses on projected PFD levels over the current 10-year projection period under five scenarios: statutory (current law), POMV 50/50, POMV 33/67, POMV 25/75, and the “leftover” approach. The most recent set is here.
Recently initiated, the third set looks at the results of the Permanent Fund over time compared to the three primary benchmarks the PFC uses to measure its performance: the passive index, the performance benchmark, and the PFC’s return objective. The chart is based on a report published monthly by the PFC. The most recent set is here.
Finally, following up on that third set, we have recently also begun publishing a quarterly chart that looks at the management fees incurred by the PFC compared to those incurred by other sovereign wealth funds and the overall results the PFC achieves. Our first look at the issue was in this column. We will follow up as the PFC updates its reports quarterly.