While the knuckleheads on Capitol Hill continue to juggle with the U.S. economy, Alaskan state residents started receiving their annual checks last week.
Known to Alaskans as PFDs, the Permanent Fund Dividends are the yearly payouts every Alaskan receives as a portion of the oil riches found beneath the North Slope.
This year, the check will be for $900. Free money just for living in Alaska sounds like a pretty sweet deal to me – plus, there’s no state income tax, just a federal tax on the bounty. If you’re an Alaskan resident that has received every check since the first back in 1982, you’ve been given a total of $35,143.
Check distribution began October 3 to about 593,000 Alaskans and is about $576 million in total, according to Time.
In order to receive the check, you must have lived in Alaska for at least one calendar year.
It’s kind of like Christmas comes twice in Alaska. A lot of people splurge on new toys, travel, and clothes. It’s always prime time for a new snowmobile. Others buy groceries, pay off their credit cards, and try to make a dent in student loan payments. The cost of living in some regions can be high – as much as $6.50 for a gallon of diesel fuel, for example.
Some recipients allocate part of their dividend to charity through a “Pick. Click. Give.” program that in recent years collected upwards of $2.5 million for 472 nonprofit organizations. This trend has been on the upswing, but 95 percent of the residents still take the cash.
The Alaska Permanent Fund
The amount each year is always different. The dividend is based on a five-year rolling average of investment earnings from the $47 billion Alaska Permanent Fund, according to Time. This year’s average still includes 2009, a year of recession when the fund posted a $2.5 billion net loss in statutory income.
The Alaska Permanent Fund was established in 1976 after North Slope oil was discovered. The idea to give back to state residents was generated in 1980 by then Governor Jay Hammond, going into effect in 1982 and embraced by every governor since.
When the recession hit in 2009, the fund also took a beating, and with the rolling five-year average in effect, the amount of dividend checks has been on the lower end. Next year will not include 2009.
Free money is free money, no matter how you slice it, but $900 is nothing compared to what residents have seen in years past.
The record was 2008, when the dividend payout was for $2,069. Last year it was only $878, the lowest since 2005. The checks have varied over the years, as low as $331.29 in 1984, up to $1,174 in 2011; you get the idea.
When the record was set in 2008, then-governor Sarah Palin even convinced the Alaska legislature to add an additional $1,200 as an energy rebate, the Alaska Dispatch reported.
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A lot is contingent on Alaska’s oil moving forward. Definitely, a sizable dividend check each year removes a lot of contention you might otherwise get from residents.
This is especially important as Alaska begins to realize its unconventional and untapped resources.
New data confirms promise in the shale formations near Prudhoe Bay. As much as 950 million barrels could be found in the region. While resources are still unproven because of the lack of wells that have been drilled, there is great potential.
The Umiat oil field, where production could see as much as 50,000 barrels per day in the near future, would benefit Alaskans throughout the region and help sustain the trans-Alaska pipeline well into the future.
Great Bear Resources Ltd (TSX-V: CBR) is the first to embark on Alaska’s unconventional oil and will see initial production efforts. It has leased roughly 500,000 acres in hopes of becoming the first to see commercial success. And you don’t just snatch up that much land without being confident. The company will incorporate hydraulic fracturing technology to ensure operations become successful.
Today, Great Bear has two exploratory wells and has permits for six, according to Juneau Empire, with more than $100 million invested so far.
And as Great Bear leads the way, others will likely follow.
Prudhoe Bay Royalty Trust (NYSE: BPT) – a subsidiary of BP (NYSE: BP) – will likely handle the hauling for Great Bear.
Great Bear’s full developmental plan won’t be revealed until next year. In that time we will likely see new prospects emerge. We’ll be there when they do.
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