Alaska oil nears its highest price since 2008, far above what the state budgeted

Alaska North Slope crude was priced at $129.71 a barrel Wednesday, near its highest since 2008, according to the Alaska Department of Revenue's daily estimates.

The state collects taxes and royalties on North Slope oil and built this year's budget on an average price of $75 a barrel.

If prices stay high, the state could take in about $1.7 billion more than expected this budget year, according to a projection by Alaskans for Sustainable Budgets, a group that tracks state fiscal policy. That is nearly double the $1.9 billion in oil revenue the state forecast for its general fund.

At the pump, diesel averaged $6.50 a gallon statewide Friday, about $2.44 more than a year ago, according to AAA. In many rural communities, diesel runs the power plants and fuel oil heats homes.

In its October outlook, the U.S. Energy Information Administration said attacks on oil infrastructure and tankers around the Middle East pushed prices up in September. Tanker rates hit records that month, it said, raising the price refiners pay for crude.

The state's forecast is built on the average price for the budget year, which ends June 30. That average is about $97 to date, and much of the projected gain depends on prices over the next eight months.

The EIA expects Brent, the global benchmark, to average $105 a barrel this quarter and fall to $87 by next spring as Middle East oil production recovers. In the spring, the Department of Revenue said the state "may receive a temporary windfall from higher prices."

Extra oil money would not raise dividends automatically. Lawmakers set the dividend each year in the budget.

The spring forecast assumed oil would start the year above $80 a barrel and decline over the year. North Slope crude averaged about $79 in July, $86 in August, $106 in September and $121 in October through Wednesday.

Prices on Oct. 23, Oct. 26 and Wednesday were higher than on any day since July 2008. The highest was $130.12 on Oct. 23. The state's figures peaked at $144.59 in July 2008.

The budget group's estimate of the extra money has grown with prices, from about $482 million in July to about $970 million in late September to about $1.67 billion now. The group projects the rest of the year using futures prices, what traders are paying now for oil to be delivered later. That puts the full-year average near $108.

The state's spring forecast shows about $1.2 billion more in revenue at a $100 average and about $1.7 billion more at $110, if production and costs come in as forecast.

North Slope oil averaged less than Brent in July and August. In October it has averaged about $14 a barrel more. On Wednesday it was $14.39 above Brent and $26.93 above West Texas Intermediate, the main U.S. benchmark.

North Slope fields have produced about 525,000 barrels a day this month, up from about 454,000 in July and above the 518,500 the state forecast as this year's average. Production for the year to date, about 483,000 barrels a day, is still below forecast, which could cut into the gain.

Wednesday's production of 538,991 barrels was worth about $69.9 million at that day's price. The state gets only a share of that, through taxes and royalties, after shipping and other costs.

Oil is expected to bring in 28% of the state's unrestricted general fund revenue this year. The Permanent Fund draw, about $4 billion, makes up most of the rest.

Regular gasoline averaged about $4.80 a gallon statewide, up about 97 cents from a year ago. Gas and diesel prices have both eased slightly over the past month, AAA figures show.