State's top tax economist warns that volatility is the new normal
While Alaskans hope for a rebound in oil prices, the state’s top revenue economist warned the Alaska Senate Finance Committee that even if prices rebound, they may not stay high for long.
John Tichotsky, chief economist for the Tax Division of the Alaska Department of Revenue, told legislators that global oil production outpaced demand by almost 2 million barrels per day in 2015, but 2 million barrels isn’t what it used to be.
Today, the world consumes almost 95 million barrels of oil per day, close to the highest consumption rate in world history. Even though 2 million barrels represents a big surplus on global markets, it’s a relatively small margin — about 3 percent — of global demand.
In the 1980s, when oil prices plunged, the difference between supply and demand was on the order of 20 to 30 percent, Tichotsky said.