150226 Gas

As oil prices fall from prices of $110 a barrel to nearly $50 a barrel, states such as Texas and Alaska face the issue of a dramatic decrease in operating budget. In Alaska, taxes paid by oil companies account for 90% of the state’s budget resulting in a $2.6 billion dollar cut in spending from $6.1 billion to $3.5 billion for 2015. The new governor, Bill Walker, is now faced with the problem of deciding which cuts are necessary to stem the tide. Walker proposed a 5-8% cut in spending for all state agencies and a possible 25% cut over four years if oil prices continue to fall. He also stated that a natural gas pipeline currently undergoing construction will be fast-tracked to completion, but not until 2023 at the earliest. Alaska does, however, maintain a savings of nearly $14 billion from previous years where the state was earning money which will help the current crisis.

This article shows how many people, especially elected officials, are more type C and exhibit type C characteristics. One of those characteristics is not being able to predict the future and plan. States like Alaska who depend heavily on the booming oil industry for funding did not foresee the potential collapse of oil prices and the vanishing of nearly half of their income. Being this dependent on a potentially unstable market, while profitable in the short term, can have disastrous long term effects. If the oil market does not recoup to the numbers it was a few years ago, then many states are in serious trouble and will have to make serious cuts to programs. A more type A person would have been able to see the dangers of this line of thinking and ensured that if such an event occurred, the state would be able to recover with minimal damage.

Source

http://www.nytimes.com/2015/01/26/us/as-oil-falls-alaskas-new-chief-faces-a-novel-goal-frugality.html?ref=politics&_r=0

Comments (1)

  1. Vijayanand Narasimhamoorthi

    Reply

    The article mentioned about the Type C officials taking care of the state. It was so evident in the past that oil prices hitting the roof top and entire world raised serious concern over this. It was foreseen by so many people that prices will reduce. States like Alaska and Texas which failed to analyze or foresee this coming is bit surprising and the reactive way of officials is to just cut down on spending and bring about various measures to recover. The Type A official would have sensed this coming and this reactive approach could have avoided, which would have been in better spending rather than drastic cut. Thus moving forward, officials will have to sense what is coming in future and hatch plans. There is all information available out there to perceive and recover better.

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