Alaska’s financial picture dimmed a bit further on Thursday as the Department of Revenue released its Fall 2025 Revenue Forecast, showing lower expected petroleum revenue for the coming fiscal years and a continued slide in projected oil prices.
While production is expected to improve in 2027, it is not enough to counter the downward trend in state revenue.
The fall forecast arrives nine months after former Commissioner Adam Crum issued the Spring 2025 Revenue Forecast and six months after his June interim update, both of which signaled worsening market conditions. Acting Commissioner Janelle Earls’ fall summary confirms that those early warning signs have now materialized.
The spring forecast assumed Alaska North Slope crude would average $74.48 per barrel in FY2025 and $68 in FY2026, based on stable indicators at the time. By late May, the department’s internal update had already lowered those numbers to $73.76 for FY2025 and $64.23 for FY2026.
The fall release drops expectations again. DOR now projects ANS oil prices of $65.48 per barrel for FY2026 and $62 for FY2027 — a decline of $2.52 and $5, respectively, from the spring forecast’s comparable estimates.
Long-term prices are still assumed to recover to $75 by 2036, but the near-term pattern is unmistakable: Every update since March has ratcheted oil prices downward, feeding directly into lower revenue expectations.
Oil production forecasts have shifted unevenly through the year. The spring forecast estimated FY2026 production at 464,000 barrels per day after a FY2025 average of 466,800 barrels per day. The fall numbers revise FY2026 downward to 457,000 barrels per day, a 7,000-barrel decline from what Crum’s team had projected.
But the picture brightens for FY2027, which is now forecast to jump to 517,800 barrels per day, an increase of more than 28,000 barrels per day from the earlier outlook. The department expects long-term production to reach approximately 621,200 barrels per day by FY2036.
The overall trend is a temporary dip followed by a rebound, but the rebound is not soon enough to help the state’s FY2026 finances.
The fall forecast places Unrestricted General Fund revenue at $2.1 billion for FY2026 and $2.2 billion for FY2027, both lower than what the state had been counting on in earlier forecasts.
In the spring, DOR estimated $2.3 billion for FY2026. By the June interim update, that number had already fallen by $222 million. The fall release further revises FY2026 down by $181 million compared to the spring projection.
FY2027 revenue also lands lower than the long-term numbers published in the spring forecast, dropping by $119 million.
The department attributes the decline to a combination of weaker oil prices and reduced expectations for corporate income tax collections.
While petroleum revenue continues to sag, the Permanent Fund transfer — the state’s constitutionally authorized percent-of-market-value draw — remains stable or growing. The fall forecast projects a transfer of $3.8 billion for FY2026 and $4 billion for FY2027, funds that support both state services and Permanent Fund dividends.
This continues a pattern that began years ago: Oil revenue is no longer the primary driver of Alaska’s budget. The Permanent Fund now routinely accounts for more than half of all UGF dollars.
Across three major updates of March, June, and now December, the Department of Revenue’s message has been consistent: lower prices, lower revenue, tighter budgets.
The fall forecast confirms that FY2026 will be the most challenging year in the current outlook, with both price and production declining at the same time. FY2027 brings better production, but still-soft prices mean the revenue recovery will be slow.
The full Revenue Sources Book is expected next week, with more detail on the state’s ten-year fiscal outlook. The governor’s proposed budget is set to be released shortly.
