8th November 2026
When oil prices rise, motorists and households across Britain face higher costs for petrol, diesel, heating oil and energy. Oil-producing countries and regions, however, can benefit from increased revenues generated by their natural resources.
But there is an interesting exception to the usual approach to managing oil wealth. In Alaska, eligible residents receive an annual payment from a fund established using the state's mineral wealth. Even when fuel prices rise, residents can receive money directly from the state to help offset some of the additional costs.
It raises an interesting question for Britain and Scotland: could we have done something similar with the enormous wealth extracted from beneath the North Sea?
Alaska's annual oil dividend
Alaska operates a system known as the Permanent Fund Dividend. It provides an annual payment to eligible residents, including children, from the state's accumulated oil wealth and investment returns.
The scheme has been operating for decades and is based on an idea that is relatively simple: natural resources belong to the people, and some of the wealth generated from exploiting them should be preserved for future generations.
The 2026 payment is $1,200 per eligible resident. This comprises a $1,000 dividend approved through the state's budget and a further $200 energy relief payment triggered by an oil-price threshold.
For a family of four, that represents $4,800 in additional household income.
It is not a complete answer to higher fuel costs, particularly in a state where many communities face expensive heating and transport. However, it provides a direct financial benefit that people elsewhere in America do not receive.
The important point is that the payment is not simply a share of the latest month's oil revenue. It comes from a much larger investment fund that has accumulated wealth over many years.
How Alaska built its fund
The Alaska Permanent Fund was established in 1976, when the state recognised that the development of its oil industry and the Trans-Alaska Pipeline would generate substantial revenues.
Rather than allowing successive governments to spend all the money as it arrived, Alaska's constitution was amended following a public vote to require at least 25 per cent of certain mineral revenues to be placed in a permanent investment fund.
The money is invested internationally in shares, bonds, property and other assets.
The original capital is protected, while investment earnings can be used to support government expenditure and the annual dividend.
The fund has become a substantial financial asset, providing Alaska with an ongoing source of income long after the original oil revenues have been received.
There is also an important distinction between the fund's investment income and the dividend itself. The annual payment is determined through the political and budgetary process, rather than being an automatic percentage of that year's oil production or prices.
Nevertheless, the principle is clear. A proportion of the wealth generated from a non-renewable resource is converted into a financial asset that can benefit generations of residents.
Norway took a different approach
Alaska is not the only place to recognise the importance of preserving oil wealth.
Norway established its Government Pension Fund Global to manage the country's petroleum revenues for the long-term benefit of its population.
It is now one of the world's largest sovereign wealth funds, with holdings worth approximately 21.3 trillion Norwegian kroner at the end of 2025.
Unlike Alaska, Norway does not distribute annual cheques to individual citizens. Instead, petroleum revenues are transferred into the fund and invested internationally. The government can use a carefully controlled proportion of the fund's expected investment returns to support public spending.
The intention is to avoid spending the underlying wealth while ensuring that future generations benefit from the country's oil and gas resources.
Norway and Alaska therefore demonstrate two different approaches. One provides a visible annual payment to residents, while the other concentrates on building national wealth and supporting public services over the long term.
Both recognise that oil revenues should not simply disappear into the ordinary spending budgets of successive governments.
What happened to Britain's North Sea oil wealth?
Britain also had an opportunity to establish a substantial national oil fund.
North Sea oil production began to develop rapidly during the 1970s, providing successive governments with significant tax revenues. At its height, the industry generated considerable wealth and supported employment, investment and associated industries throughout Scotland and beyond.
However, Britain did not establish a Norwegian-style sovereign wealth fund or an Alaskan-style dividend system.
Instead, North Sea revenues were largely treated as part of the government's general tax income and used alongside other revenues to finance public expenditure.
According to HMRC figures published in October 2026, net tax revenues from UK oil and gas production amounted to £4.3 billion in the 2025/26 financial year, compared with £4.5 billion the previous year.
The figures include offshore corporation tax, petroleum revenue tax and the Energy Profits Levy.
These revenues remain useful to the Treasury, but they are considerably smaller than the amounts that could have been accumulated and invested over several decades.
The North Sea industry is now much more mature, production is declining and the costs of decommissioning ageing installations will become increasingly important.
Britain has therefore reached a stage where the opportunity to build a fund from decades of high production has largely passed.
That does not mean the debate about how remaining revenues should be used is no longer relevant.
Could Scotland have benefited?
This question has particular significance for Scotland because much of Britain's offshore oil and gas industry is geographically associated with Scottish waters.
Government Expenditure and Revenue Scotland (GERS) estimated Scotland's geographical share of North Sea revenues at approximately £3.2 billion in 2025/26.
That does not mean the Scottish Government receives that money directly. North Sea taxation is reserved to the UK Government, and GERS provides an illustrative allocation of revenues rather than a separate Scottish tax account.
Nevertheless, it demonstrates the continuing economic importance of the industry.
During previous debates about Scottish independence, the possibility of establishing an oil fund was frequently raised. The argument was that Scotland could have followed Norway's example, saving a proportion of petroleum revenues rather than relying entirely on them to finance current expenditure.
There were, of course, significant uncertainties about future production, oil prices, public spending requirements and the costs of establishing an independent state.
But the underlying question remains valid. Had a proportion of North Sea revenues been invested over the decades, what financial position might Scotland be in today?
It is an interesting counterfactual, particularly when governments are now struggling to find money for public services and infrastructure.
Could Britain introduce an energy dividend now?
Establishing an Alaska-style system in Britain today would be more difficult than it would have been when North Sea production was at its height.
Oil and gas revenues are declining over the longer term, and the government has considerable competing demands on its finances.
However, there is nothing to prevent the creation of a new national investment fund using a combination of future resource revenues and other government contributions.
A proportion of any future North Sea tax receipts could be placed into a protected fund, with investment returns eventually supporting public services, energy security or a modest annual payment to citizens.
A British system would not necessarily need to copy Alaska. It could also incorporate elements of the Norwegian approach, concentrating on building long-term financial security rather than distributing all available returns immediately.
There would also be questions about whether payments should go to everyone, whether they should be means-tested, and whether some of the returns would be better spent on reducing household energy costs.
The important principle would be to establish a lasting asset rather than allowing the money to disappear into day-to-day government expenditure.
A lesson from Alaska
There is something appealing about the Alaskan approach.
When oil prices rise, households face higher costs, but eligible residents also have a direct financial connection to the wealth generated from their state's natural resources.
The additional $200 energy payment in 2026 makes that connection particularly visible.
It does not eliminate the financial pressures facing Alaskans, and the annual dividend can vary. But it demonstrates that there are alternative ways of managing the benefits of natural resources.
Norway shows that a country can build enormous financial reserves from oil revenues. Alaska shows that some of that wealth can also be returned directly to residents.
Britain largely missed the opportunity to establish either system when North Sea oil production was at its height.
Perhaps the most important lesson is about the responsibilities of governments when managing national resources.
Oil beneath the sea is a finite asset. Once extracted and sold, it cannot be replaced. But the money generated from it can be invested, preserved and passed on to future generations.
We have spent decades extracting North Sea oil and gas. The question worth asking now is why we did not preserve more of the wealth it generated.
Alaska and Norway demonstrate that it was possible to do things differently.