The Oil Econony

The impact of oil development in Alaska has been monumental.  Huge amounts of money began to flow into the state with the construction of the trans-Alaska oil pipeline in 1974 and production in the field in 1977. Since then, more oil fields have been added to the production on the North Slope.  Over the last four decades, Alaska's North Slope has produced about 20% of the domestic oil used in the United States. In 1994 a ban on the export of Alaska oil was lifted allowing oil to be sold on the world market. 

In 2018, after 40 years of operation, more than 17 billion barrels of oil were pumped from the North Slope through the pipeline. Oil production has been the engine of economic growth in Alaska. The oil industry supports one-third of Alaska's jobs, generating over 100,000 jobs throughout the state. When the spending of state revenue from oil taxes is considered, the oil industry accounts for about 1/2 of Alaska's economy.

Oil lease sales and production taxes have largely funded state government since 1969, accounting for over $180 billion in total revenue since statehood. They have been the source of up to 90 percent of the state government’s revenues over this time. In 1980, as taxes on oil flowing through the pipeline filled the state's coffers, the legislature eliminated the Alaska income tax, which had been in place since 1949. Alaska is currently the only state in the nation without either a state income tax or sales tax to fund government services. Falling oil prices since 2016 have significantly reduced oil revenue to the state, creating large budget deficits. This has led to some discussions of bringing back an income tax to provide an alternative source of revenue beyond oil.