Alaska abandons infrastructure projects - no money due to falling oil prices
Washington - Kyiv, January 01 (PolitNavigator, Vladimir Mikhailov) - Due to falling oil prices, funding for six large-scale projects in Alaska, a state whose budget is mainly formed from oil revenues, has been suspended.
Alaska Governor Bill Walker issued an executive order on Friday, explaining his decision by saying that due to falling oil prices, the state's budget deficit had grown sharply, reaching $3,5 billion, he writes. The New York Times.
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Leaders in Alaska and some other US states are adjusting revenue forecasts. Reductions in budget expenditures have already begun and will continue if oil prices remain low.
The prosperity of oil-rich states will depend on the reserves built up in good times and the degree of dependence on oil revenues. Some states, such as Texas, have diversified their economies since oil prices plunged in the mid-1980s. Others, such as Alaska, remain heavily dependent on oil and will have to draw down large amounts of savings to survive the period of cheap fuel.
Projects suspended in Alaska include construction of a gas pipeline, a hydroelectric power station, two roads, a bridge and the Kodiak missile system.
It was previously reported that in Texas, about 2,3 thousand people working in the mining industry were laid off in October-November alone. Ratings agency Fitch has warned that property prices in the state are unlikely to remain at current levels if the price of oil continues to fall. The state lost an average of up to $83 million in daily oil and gas revenue between July and December.
In Louisiana, falling oil prices mean a $1,4 billion budget deficit for the 2015-2016 budget year, although layoffs there have so far been limited to 162 public sector jobs.
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