Alaska Sinks to Bottom of Business Rankings on Oil Price Woes
- Alaska ranked 50th in CNBC’s 2025 Top States for Business due to economic weakness tied to oil dependence.
- Oil revenues account for up to 73% of Alaska’s budget, leaving it vulnerable to price swings.
- The state is pursuing a $44-billion LNG project that could further entrench its reliance on volatile energy markets.
The high dependence on oil for state revenues is squeezing Alaska’s budget when oil prices decline and making its economy grow below the national average. The struggling economy amid volatile oil prices is the key reason why Alaska has been rated as the worst state for doing business in America in 2025 by CNBC.
Alaska ranks 50th in CNBC America’s Top States for Business rankings in 2025. The state of the economy has the biggest weight in compiling the rankings, but workforce, infrastructure, the cost of doing business, and technology and innovation also play a role in the methodology.
The 2025 ranking is CNBC’s 19th year of studying state competitiveness by analyzing a record-high number of 135 metrics to see how states are navigating opportunities and risks. Economy is the top-weighted category—and here Alaska ranks 50th out of 50 states.
North Carolina leads the rankings this year, thanks to its economy, workforce, business friendliness, and above-average infrastructure and technology. Texas and Florida rank second and third, respectively.
But Alaska – despite paying an annual dividend to residents from the Alaska Permanent Fund from surplus oil and gas revenues – has long been heavily dependent on petroleum revenues for its economic growth and state revenues.
With lower crude prices this fiscal year from a year earlier, revenues are expected to decline. The price of Alaska North Slope crude averaged $85.24 per barrel in the 2024 fiscal year, according to data from the Alaska Department of Revenue. The department projects the price to fall to $74.48 a barrel for the 2025 fiscal year, and further down to $68 in FY 2026 and $67 per barrel in FY 2027.
Excluding Permanent Fund earnings to the general fund, petroleum is expected to provide between 69% and 73% of unrestricted revenue for the state of Alaska over the next 10 years, the Alaska Department of Revenue said in its Spring 2025 Revenue Forecast.
The heightened volatility in oil prices in recent years makes forecasts even more guesswork than before Covid and the war in Ukraine.
“Over the past several years, we have seen a global pandemic, extreme volatility in investment and oil markets, wars and other geopolitical issues, and economic concerns ranging from negative interest rates to a return of inflation,” the Alaska Department of Revenue said.
“Given the uncertainty, it remains a challenge to make predictions on the stock market, oil prices, or revenue with certainty.”
In the absence of predictability, Alaska’s budget revenues and economy remain at the mercy of the volatile oil prices and the supply-demand and geopolitical factors behind them.
Yet, Alaska is doubling down on unleashing its natural resources, with the strong support of the Trump Administration.
State firm Alaska Gasline Development Corporation (AGDC) seeks to advance the Alaska LNG project, designed to deliver North Slope natural gas to Alaskans and export LNG to U.S. allies across the Pacific. An 800-mile pipeline is planned to transport the gas from the production centers in the North Slope to south-central Alaska for exports. In addition, multiple gas interconnection points will ensure meeting in-state gas demand.
U.S. officials toured Asia earlier this year in search of potential Asian investors in the LNG project estimated at $44 billion. The LNG export facility is strongly supported by the Trump Administration, which has also been pressing Japan and South Korea to buy more LNG as a way to reduce America’s trade deficit with its Asian allies.
The proposed $44-billion Alaska LNG project, if it proceeds, is set to contribute to the economy and hydrocarbon exports of the state. But it will also further tie Alaska’s economy and state revenues to the price of another energy commodity—natural gas.
By Tsvetana Paraskova for Oilprice.com
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