Good news … maybe

At last, the possibility of good news for Alaska.

The Wall Street Journal is saying today that $80 a barrel oil this year is not out of the realm of possibility because worldwide demand is outstripping supply held in check by the Organization of Petroleum Exporting Countries.

Oil prices have been climbing gradually, and oil already is trading at its highest levels in three years after this past year’s 22 percent gain for U.S. crude futures. Some market watchers expect prices to set new milestones as the rally continues in 2018 – and perhaps hit $80 per barrel.

U.S. crude futures yesterday went up 0.97 percent, to $63.57 a barrel, and Brent, the global benchmark, was up 0.55 percent, to $69.20 a barrel, the Journal reports.

Shrinking inventories, commitment by OPEC to cut output through the year and only modest production growth from outside the group could all work to push prices higher, says Byron Wien, vice chairman of the Private Wealth Solutions group at Blackstone. He put $80 a barrel oil as one of his 10 surprises for markets this year.

Citigroup also says $80 oil is a real possibility. The bank says the right combination of geopolitical crises could boost crude prices into the $70 to $80 range. With supplies tight, any disruption could send prices higher.

Analysts at Commerzbank are not so sure and say market participants are engaging in “selective perception,” while ignoring the risks of an onslaught of new production from U.S. shale — increasingly likely at higher prices.

For a state facing $2.7 billion in red ink, a price jump into the $80 range would have dramatic effects. As the oil industry in Alaska, bolstered by oil tax changes of a few years ago, continues to invest and bring new production online, rising oil prices could put a sizable dent in Alaska’s fiscal woes.

While we wait to see how it all plays out, we can cross our fingers.

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2 Responses to Good news … maybe

  1. A.M. johnson January 11, 2018 at 6:50 pm

    I sent my Representative (Ortiz) this story when I first read it. My message to Rep. Ortiz was: “Don’t spend it till you have it!!”
    There is a tendency to grasp at straws or the sound of the wind as it passes.

    Regards, A.M.Johnson-Ketchikan

    Reply
  2. Jim Schradle January 11, 2018 at 8:40 pm

    The Alaska variable in the equation is the “Walker/Legislature” factor.

    Reply

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