Category: Educational

  • How the Permanent Fund Works

    How the Permanent Fund Works

    Talking about the Permanent Fund can be confusing. There are a lot of moving pieces. But, the illustration above shows how all of those pieces connect. The rest of this article will try to break the key points down a little more clearly. There is a rich history around the fund, its intent, and its…

  • The False Narrative About ERA Draws

    The False Narrative About ERA Draws

    If you’ve been watching the finance committees work this session, you’ve almost certainly heard an argument about not taking “excess” draws out of the earning reserve account (ERA). There is some truth to the assertion. But, there’s a larger false narrative afoot. Today, I want to take a moment to explore the issue – both…

  • Pricing ANS: Part 3 – ANS Assessments

    Pricing ANS: Part 3 – ANS Assessments

    Now that we’ve discussed the physical market and the futures market, we can finally turn to understanding how Alaska’s oil get’s priced. It boils down to a combination of factors that deal with each of these markets and their dynamics. Alaska North Slope (ANS) crude doesn’t have a spot market (there just aren’t enough barrels)…

  • Pricing ANS: Part 2 – Futures Markets

    Pricing ANS: Part 2 – Futures Markets

    In part 1 of this series, I laid out who the buyers, sellers, and shippers of Alaska North Slope (ANS) oil are. Those players make up the physical market, in which market fundamentals – the laws of supply and demand – determine prices. But, there is another market that buys and sell crude oil. It’s…

  • Pricing ANS: Part 1 – Physical Market Dynamics

    Pricing ANS: Part 1 – Physical Market Dynamics

    After all the craziness of negative prices last month, a reader asked if I would write an article explaining how pricing Alaska’s crude oil works. That seems like a good idea, although I can’t do it in one digestible piece. So, the plan is to write a three-part series that can act as an educational…

  • Alaska is Unique When it Comes to Oil Ownership and Taxes

    Alaska is Unique When it Comes to Oil Ownership and Taxes

    Around the globe, there are two basic systems governing the ownership of oil. In the first, resources are owned and controlled by the government. In the second, personal property rights extend all the way down to the core. The difference between the treatment of subsurface mineral ownership has far reaching implications. And, Alaska finds itself…

  • Fixing Alaska’s Investment Earnings Paradox

    Fixing Alaska’s Investment Earnings Paradox

    I wrote a piece a few weeks back about how Alaska’s current investment earnings laws don’t work together. They create a paradox in which the budget deficit gets smaller if investment earnings get worse. In the extreme, we could balance the budget by losing $7 billion in the stock market. Because that makes absolutely no…

  • Inflation Proofing the Permanent Fund

    Inflation Proofing the Permanent Fund

    There was a little bit of a sparring match during the PFD working group meeting last week. Senators Hughes and Stedman seemed to have different impressions about the Percent of Market Value (POMV) approach to managing the Permanent Fund. But, the fireworks came in the form of a misunderstanding about how inflation proofing works. Let’s…

  • Why is Alaska’s Population Declining?

    Why is Alaska’s Population Declining?

    The Department of Labor published Alaska’s annual population numbers in January. It shows a reduction of 3,048 people in FY19. That is the third annual loss in population in a row.    On a quarterly basis, the available U.S. Census data suggests we’ve been losing population for 12 consecutive quarters (beginning in October 2016). And…

  • Alaska Has an Investment Return Paradox

    Alaska Has an Investment Return Paradox

    Over the last five years, Alaska has pivoted from being a Petro-state to a Trust Fund kid. Thanks to years of saving and re-investing a quarter of our oil royalties, we now have over $66 billion in the bank. And, those billions of dollars go to work every day, bringing billions of friends home to…