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During the transition of governors, there has been the revelation that at low oil prices (around 50% lower than this time last year) the state pays out more royalties than revenue it brings in to producing companies. Some suggest it is not a result of the taxing regime which the State has applied to the producing companies but rather a matter of low production. Others have said it would still be a ‘red’ situation regardless had the state kept the old ACES regime that was changed last year or stuck with the old. And some say it is not clear if this is a product of the gas fields in Cook Inlet or the crude fields up on the North Slope…..No matter, this is the first large crisis the Governor and his staff will face. With a very competent Commissioner of Revenue,  seasoned DNR Commissioner, and the Governor’s private law practice experience specializing in oil/gas there will no doubt be many angles this will be looked at from for a solution. Yet the other half of formulating a plan to come into the black during a period of oil prices under $100/barrel will also involve the state legislature. This is a first in Alaska’s statehood history, and is sure to make the spring a lively time in Juneau during the legislative session.

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