Record payday: Big oil pays big for Alaskan residents

September 25, 2015

By William Pentland

Next week, the State of Alaska will begin mailing checks for $2,072 to each of the state's more than 644,000 residents. It will be the largest payout for state residents from oil and mineral royalties in the state's history, surpassing the previous record of $2,069 paid out by the fund in 2008.

Valdez, Alaska. Credit: Jason Grote/Wikimedia Commons

The Alaska Permanent Fund (APF) was created in 1976 by a constitutional amendment that required at least 25 percent of all of the state's mineral royalties and lease payments to be set aside in a savings account to be paid out in the future to state residents. The idea was to ensure future generations of Alaskans receive a portion of the state's oil wealth after the oil has run out.

Beginning in 1982, the APF has distributed an annual dividend to the state's residents, which is calculated based on the APF's average income during the previous five years. The APF has ballooned in size over the past 39 years to more than $50 billion in total assets.

Crude oil prices collapsed in 2014 as global production exceeded demand. They have yet to recover.

Despite the fall in crude oil prices, the total dividend paid out by the APF this year amounts to a whopping $1.33 billion. To put that sum in perspective, Alaska spent slightly less than $1.33 billion on education in 2014.

According to the Alaska's Department of Revenue, the APF's investment portfolio benefited in 2014 from a surging stock market as well as real estate and private equity investments.

Alaska residents must live in the state for an entire calendar year before they become eligible to receive the annual dividend payment. The annual payout from the fund is credited with keeping many low-income Alaskan families out of poverty.

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http://www.fierceenergy.com/story/record-payday-big-oil-pays-big-alaskan-residents/2015-09-25