Alaska Forecasts Hundreds of Millions in New Revenue from Higher Oil Prices

The Dunleavy administration projects a $545 million increase in revenue for the current fiscal year due to rising oil prices.

Mar. 13, 2026 at 10:19pm

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The Alaska Department of Revenue has released a biannual revenue forecast projecting $545 million in additional revenue for the current fiscal year, primarily due to higher oil prices driven by the ongoing conflict in the Middle East. The state now expects to collect $2.7 billion in revenue from oil production and other taxes, up from the previous projection of $2.1 billion. The department is forecasting an average oil price of $75 per barrel for the remainder of the fiscal year, up from the previous estimate of $65 per barrel.

Why it matters

Alaska's revenue is heavily dependent on oil prices, and even small fluctuations can have a significant impact on the state's budget. This unexpected increase in revenue could allow lawmakers to allocate funds towards capital projects, education, the Permanent Fund dividend, or save for future use. However, some lawmakers caution against relying too heavily on the current high oil prices given the uncertainty surrounding the duration of the Middle East conflict and its impact on global supply.

The details

The Department of Revenue's updated forecast projects the state will collect $545 million more in revenue than previously anticipated through the end of the current fiscal year. This is largely due to oil prices averaging $67 per barrel over the first eight months of the fiscal year, higher than the previous estimate of $65 per barrel. The department is now forecasting an average price of $91 per barrel for the remaining four months, bringing the full-year average to $75 per barrel.

  • The Department of Revenue released the biannual revenue forecast on Friday, March 13, 2026.
  • The updated forecast covers the current fiscal year, which ends in June 2026.
  • The department is also projecting $510 million more in oil revenue for the next fiscal year, which begins in July 2026.

The players

Alaska Department of Revenue

The state agency responsible for forecasting and collecting revenue, including from oil production and other taxes.

Rep. Andy Josephson

An Anchorage Democrat who co-chairs the Finance Committee in the Alaska Legislature.

Gov. Mike Dunleavy

The current governor of Alaska, who had previously identified $500 million in supplemental budget items for the current fiscal year.

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What’s next

The Alaska Legislature will need to determine how to allocate the additional revenue projected in the updated forecast, whether towards new spending, the Permanent Fund dividend, or saving for the future.

The takeaway

Alaska's heavy reliance on oil revenue means the state's budget is highly sensitive to fluctuations in global oil prices. While the current spike in prices has provided a significant windfall, lawmakers must exercise caution in committing those funds given the inherent volatility of the oil market.