Keywords: development policy, petroleum marketing, petroleum refining, royalty, Alaska, economic development, state ownership, oil and gas, natural gas, petroleum subsurface rights, import substitution, value-added export, state oil revenues, remote regions, energy finance
Economic development through state ownership of oil and gas: evaluating Alaska's royalty-in-kind programme
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 programmes regarding the disposition of oil and gas resources, focusing on the evolution of the royalty-in-kind programme. It examines the relative success of different programmes in achieving the objectives of import substitution and value-added export relative to the cost in foregone revenue. The analysis leads to general conclusions about programmes 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.