Energy

See also: Natural gas in Alaska and Energy law § Alaska law

The Trans-Alaska Pipeline transports oil, Alaska's most financially important export, from the North Slope to Valdez. Pertinent are the heat pipes in the column mounts, which disperse heat upwards and prevent melting of permafrost.

Alaska has vast energy resources, although its oil reserves have been largely depleted. Major oil and gas reserves were found in the Alaska North Slope (ANS) and Cook Inlet basins, but according to the Energy Information Administration, by February 2014 Alaska had fallen to fourth place in the nation in crude oil production after Texas, North Dakota, and California.^[69][70] Prudhoe Bay on Alaska's North Slope is still the second highest-yielding oil field in the United States, typically producing about 400,000 barrels per day (64,000 m³/d), although by early 2014 North Dakota's Bakken Formation was producing over 900,000 barrels per day (140,000 m³/d).^[71] Prudhoe Bay was the largest conventional oil field ever discovered in North America, but was much smaller than Canada's enormous Athabasca oil sands field, which by 2014 was producing about 1,500,000 barrels per day (240,000 m³/d) of unconventional oil, and had hundreds of years of producible reserves at that rate.^[72]
The Trans-Alaska Pipeline can transport and pump up to 2.1 million barrels (330,000 m³) of crude oil per day, more than any other crude oil pipeline in the United States. Additionally, substantial coal deposits are found in Alaska's bituminous, sub-bituminous, and lignite coal basins. The United States Geological Survey estimates that there are 85.4 trillion cubic feet (2,420 km³) of undiscovered, technically recoverable gas from natural gas hydrates on the Alaskan North Slope.^[73] Alaska also offers some of the highest hydroelectric power potential in the country from its numerous rivers. Large swaths of the Alaskan coastline offer wind and geothermal energy potential as well.^[74]

Alaska proven oil reserves peaked in 1978 and have declined more than 60% since then.

Alaska oil production peaked in 1988 and has declined more than 65% since then.

Alaska's economy depends heavily on increasingly expensive diesel fuel for heating, transportation, electric power and light. Though wind and hydroelectric power are abundant and underdeveloped, proposals for statewide energy systems (e.g. with special low-cost electric interties) were judged uneconomical (at the time of the report, 2001) due to low (less than 50¢/gal) fuel prices, long distances and low population.^[75] The cost of a gallon of gas in urban Alaska today is usually 30–60¢ higher than the national average; prices in rural areas are generally significantly higher but vary widely depending on transportation costs, seasonal usage peaks, nearby petroleum development infrastructure and many other factors.

Permanent Fund

The Alaska Permanent Fund is a constitutionally authorized appropriation of oil revenues, established by voters in 1976 to manage a surplus in state petroleum revenues from oil, largely in anticipation of the then recently constructed Trans-Alaska Pipeline System. The fund was originally proposed by Governor Keith Miller on the eve of the 1969 Prudhoe Bay lease sale, out of fear that the legislature would spend the entire proceeds of the sale (which amounted to $900 million) at once. It was later championed by Governor Jay Hammond and Kenai state representative Hugh Malone. It has served as an attractive political prospect ever since, diverting revenues which would normally be deposited into the general fund.
The Alaska Constitution was written so as to discourage dedicating state funds for a particular purpose. The Permanent Fund has become the rare exception to this, mostly due to the political climate of distrust existing during the time of its creation. From its initial principal of $734,000, the fund has grown to $50 billion as a result of oil royalties and capital investment programs.^[76] Most if not all the principal is invested conservatively outside Alaska. This has led to frequent calls by Alaskan politicians for the Fund to make investments within Alaska, though such a stance has never gained momentum.
Starting in 1982, dividends from the fund's annual growth have been paid out each year to eligible Alaskans, ranging from an initial $1,000 in 1982 (equal to three years' payout, as the distribution of payments was held up in a lawsuit over the distribution scheme) to $3,269 in 2008 (which included a one-time $1,200 "Resource Rebate"). Every year, the state legislature takes out 8% from the earnings, puts 3% back into the principal for inflation proofing, and the remaining 5% is distributed to all qualifying Alaskans. To qualify for the Permanent Fund Dividend, one must have lived in the state for a minimum of 12 months, maintain constant residency subject to allowable absences,^[77] and not be subject to court judgments or criminal convictions which fall under various disqualifying classifications or may subject the payment amount to civil garnishment.
The Permanent Fund is often considered to be one of the leading examples of a "Basic Income" policy in the world.^[78]

Cost of living

The cost of goods in Alaska has long been higher than in the contiguous 48 states. Federal government employees, particularly United States Postal Service (USPS) workers and active-duty military members, receive a Cost of Living Allowance usually set at 25% of base pay because, while the cost of living has gone down, it is still one of the highest in the country.^{[citation needed]}
Rural Alaska suffers from extremely high prices for food and consumer goods compared to the rest of the country, due to the relatively limited transportation infrastructure.^{[citation needed]}