CNBC’s 2025 Top States for Business rankings have once again placed Alaska dead last, citing its oil-dependent economy and vulnerability to volatile crude prices as the primary culprits. The article from OilPrice.com, “Alaska Sinks to Bottom of Business Rankings on Oil Price Woes,” echoes this sentiment, highlighting how oil accounts for up to 73% of Alaska’s budget and how falling prices have squeezed economic growth. But this narrative misses the mark. Alaska’s energy sector is not a liability—it’s a powerhouse with untapped potential that could reshape markets, bolster U.S. energy security, and deliver massive benefits for Alaskans and the nation. Let’s unpack Alaska’s energy mix, its impact on local and national markets, and why ramping up oil and gas production to supply California could be a game-changer.
Alaska’s Energy Mix: The Backbone of the Economy
Alaska’s energy landscape is dominated by oil and natural gas, with the North Slope serving as a cornerstone of U.S. energy production since the Prudhoe Bay discovery in 1968. According to the U.S. Energy Information Administration (EIA), Alaska holds about 125 trillion cubic feet of proven natural gas reserves (second only to Texas) and produced 3.5 trillion cubic feet of natural gas in 2024, ranking fifth nationally. Oil production, while down from its 1988 peak of 2 million barrels per day (b/d), still averaged 461,000 b/d in fiscal 2024, with new projects like ConocoPhillips’ Nuna and Pikka expected to boost output by 16,000 b/d in 2026—the first annual increase since 2017.
Oil and gas are economic lifelines for Alaska. The industry has generated over $180 billion in state revenue since statehood, with $3.1 billion in state and local taxes and royalties in FY 2019 alone. It accounts for roughly 70% of state revenue and nearly half the operating budget, with local economies like the North Slope Borough relying on it for 98% of their budgets. The Alaska Permanent Fund, fueled by oil revenues, distributes dividends to residents—$3,284 per person in 2022—and is projected to contribute $3.7 billion to the general fund in FY 2025.
Beyond hydrocarbons, Alaska’s energy mix includes limited contributions from renewables and other sources. Natural gas powers over 70% of Southcentral Alaska’s electricity and heating needs, while diesel generators dominate rural communities. Renewables like wind and hydropower exist but are marginal; for instance, one Native corporation operates a utility-scale wind farm, but only 16% of households use natural gas for heating, and broadband limitations hinder tech-driven energy innovation. The state’s harsh climate and sparse population make scaling renewables challenging, reinforcing oil and gas as the economic engine.
Energy’s Impact on Alaska’s Markets
The OilPrice.com article and CNBC’s rankings paint Alaska’s oil dependence as a weakness, pointing to a 1.5% GDP growth rate in 2024 (vs. 2.8% nationally) and budget forecasts tied to volatile oil prices ($68/barrel for FY 2026). But this overlooks the broader market dynamics. Oil and gas drive direct, indirect, and induced economic impacts, supporting 24% of Alaska’s wage and salary jobs when taxes and royalties are factored in. The industry’s ripple effects—through supply chains, employee spending, and infrastructure—sustain communities statewide.
Alaska’s energy sector also has global reach. The proposed $44-billion Alaska LNG project, backed by the Trump administration, aims to pipe North Slope gas 800 miles to Southcentral Alaska for domestic use and LNG exports to Pacific allies. This could stabilize local energy costs, where families pay 60% above U.S. averages, and reduce reliance on imported gas, which costs $13.72 per 1,000 cubic feet. Moreover, projects like the Willow development (600 million barrels) signal a production rebound, with the EIA forecasting North Slope output rising to 469,500 b/d by FY 2026.CNBC’s critique ignores these strengths, focusing on short-term price dips (Alaska North Slope crude fell to $63.49/barrel in May 2025 before rebounding above $70) while dismissing long-term potential. Alaska’s economy is not just surviving on oil—it’s poised for growth, with Native corporations leveraging resource development for revenue sharing and innovation, like underground gas storage and carbon capture initiatives.
Ramping Up Production to California: A Win-Win
California, the world’s fifth-largest economy, imports about 70% of its crude oil, relying heavily on foreign sources like Saudi Arabia and Ecuador. In 2024, California’s refineries processed roughly 1.7 million b/d, with imports costing billions annually and exposing the state to geopolitical risks. Meanwhile, Alaska’s North Slope is just 1,200 miles away, with proven reserves of 3.6 billion barrels of oil and 8.9 trillion cubic feet of natural gas. Increasing Alaska’s production to supply California could transform energy markets, reduce U.S. trade deficits, and deliver tangible benefits for Alaskans.Benefits for the U.S.
- Energy Security: Replacing 70% of California’s imports (1.2 million b/d) with Alaskan crude would cut reliance on foreign oil, shielding the U.S. from supply disruptions and price spikes driven by OPEC or geopolitical tensions. The Trans-Alaska Pipeline, currently operating at 25% capacity, could scale up to move this volume, leveraging existing infrastructure.
- Economic Gains: Domestic oil production retains dollars in the U.S. economy. Assuming $70/barrel, supplying 1.2 million b/d to California could generate $30 billion annually in revenue, boosting GDP and creating jobs in refining, transport, and logistics. The U.S. trade deficit, partly driven by energy imports, would shrink as dollars flow to Alaska instead of overseas.
- Environmental Oversight: Alaskan oil is subject to stringent U.S. regulations, unlike many foreign producers. Scaling production with modern techniques (e.g., reinjecting gas to boost well pressure) minimizes environmental impact compared to less-regulated imports.
Benefits for Alaskans
- Revenue Surge: Doubling Alaska’s oil production to 1 million b/d could generate $25 billion annually in state revenue at $70/barrel, assuming current royalty and tax structures. This would supercharge the Permanent Fund, potentially increasing dividends to $5,000-$6,000 per resident and funding schools, healthcare, and infrastructure.
- Job Creation: The oil and gas industry already supports 1 in 11 Alaskan jobs. Scaling production would add thousands of high-paying jobs (average wage: $100,000/year), particularly in rural areas, reducing unemployment (Alaska’s rate is among the nation’s highest) and stimulating local economies.
- Energy Affordability: Increased gas production could lower Southcentral Alaska’s reliance on costly imported gas, easing energy bills. The Alaska LNG project’s in-state gas connections would further stabilize prices, addressing the “$16/gallon milk” problem cited by North Slope Borough Mayor Josiah Patkotak.
- Infrastructure Investment: Higher revenues would fund broadband expansion (only 2% of Alaskans have affordable access) and roads, addressing CNBC’s infrastructure critique and making Alaska more competitive for business.
Market Impacts
Flooding California with Alaskan oil could depress West Coast crude prices, benefiting refiners and consumers. However, it would require federal support to streamline permitting and counter environmental opposition, as seen in the Arctic National Wildlife Refuge’s failed 2021 lease auction. Globally, U.S. exports could rise, with Energy Secretary Chris Wright noting that allies like Japan and South Korea are eager to buy American LNG, reducing trade deficits.
Why CNBC’s Ranking Misses the Point
CNBC’s methodology overweighs short-term economic metrics (Alaska’s 50th-place economy score) while undervaluing strategic assets. Alaska’s oil and gas reserves, proximity to West Coast markets, and potential for LNG exports position it as a critical player in U.S. energy strategy. The state’s high living costs and infrastructure gaps are real but surmountable with revenue from scaled production. Efforts to diversify into carbon offsets and tourism are promising, but pale next to the immediate impact of oil and gas.
Alaska isn’t just a business destination—it’s an energy hub with ripple effects across the U.S. Supplying California would amplify these benefits, proving CNBC’s ranking shortsighted. Instead of writing off Alaska, policymakers and investors should double down on its energy potential. The real question isn’t why Alaska ranks 50th—it’s why we’re not leveraging its resources to power America’s future. We can see that California used to import its oil from Alaska, and the refineries were calibrated for Alaskan oil before Gov. Newsom’s Energy Policies wiped out the state’s energy independence.
As I have said in other articles, the United States cannot achieve Energy Dominance when our largest state, economically, imports 70% of its oil, and Alaska used to provide that oil. There is a reason the United States MSM has lost its way. They can’t get a simple story right.
Sources: OilPrice.com, CNBC, U.S. Energy Information Administration, Alaska Department of Revenue, Alaska Beacon
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