Oil prices regaining ground

The price for a barrel of crude oil topped $80 last week -- nearly double its price one year ago.

By Monday prices had dropped slightly, settling at $78.68 on the New York Mercantile Exchange.

While the higher prices strain checkbooks at the gas pumps, they're good news for the state's treasury, which turns to oil for about 90 percent of its annual intake. The higher prices could also bode well for plans to develop Alaska's natural gas resources. As oil prices slowly regain ground and the federal government considers tighter restrictions related to climate change, some analysts predict more power plants could shift to a natural gas resource base, driving demand for the cleaner fuel.

The Energy Information Administration is forecasting an average of $70 per barrel for West Texas Intermediate crude oil from October through March, with prices increasing gradually to about $75 per barrel by December 2010. Alaska North Slope crude typically runs a couple dollars under the West Texas benchmark.

Prices have fluctuated dramatically during the last two years, shooting up to a peak of $140 per barrel for WTI crude in July 2008 before diving deep through the fall and a global economic collapse. After a low of $31.41 in December 2008, they slowly began to rise again.

According to Bloomberg data, ANS crude sold for $95.68 on Oct. 1, 2008, dropping nearly five dollars the next day. The downward slide didn't let up until bottoming out at $25.81 on Dec. 22.

The climb back out of the hole has been slow, but steady. Prices struggled to hold above $40, but once there kept some momentum. The ANS price hit $50.96 in late March 2009, slipped again to the low $40s, and spent most of the rest of the year sloshing round through the $60 to $70 range. Prices topped out at $79.89 on Oct.21 as the West Texas crude price clawed up to $81.04. On Oct. 23, prices closed at $78.90 for ANS West Coast crude, and $80.05 for WTI.

Contact Rena Delbridge at rena_alaskadispatch.com.