Economic Development Through State Ownership of Oil and Gas: Evaluating Alaska's Royalty-In-Kind Program

Part of the Understanding Alaska series of publications.Government owners of petroleum subsurface rights often face constituent pressure to exercise control over the disposition of these resources in pursuit of economic development objectives. At the same time, states cannot simply dissipate the potential rent from their resources without losing a principal revenue source. The paper takes a retrospective look at the state of Alaska's policies and programs regarding disposition of oil and gas resources, focusing on the evolution of the royalty-in-kind program. It examines the relative success of different programs in achieving objectives of import substitution and value-added export relative to the cost in foregone revenue. The analysis leads to general conclusions about programs of this type, along with specific insights as the state prepares to embark on the biggest test yet related to the disposition of North Slope natural gas. Prepared for presentation to the Western Regional Science Association Annual Meeting, San Diego, California.UA Foundatio