When Gov. Frank Murkowski stepped before the Legislature in 2003, facing a $500 million shortfall, he announced: "What is our plan for increasing revenue? Well, ladies and gentlemen, in a single word, 'oil.'"

In time, that single word did lead to higher revenue, but not because of higher oil production. Alaska raised oil taxes just before worldwide conditions produced price increases that no one believed possible.

As Murkowski gave way to successors Sarah Palin and Sean Parnell, the state treasury filled with the billions that are now draining at thousands of dollars an hour with nothing to stem the flow.

With a worldwide oil industry bust that is longer and deeper than any in 45 years, Alaska oil revenues have fallen to levels that no one believed to be within the reasonable realm just a year and a half ago.

How bad is it getting?

If oil prices remain about where they are now for the next year and a half, tobacco consumers would cough up about five times as many dollars as the production tax. Alcohol drinkers and those who buy motor fuel would be paying more than the oil tax would generate.

If prices rise by $5 or so and average $35 for this fiscal year and next, the state is looking at $12 million next fiscal year in oil production taxes. It's just a coincidence, but the tax team is guessing that marijuana taxes will total $12 million in the fiscal year that starts in July.

No one knows what marijuana enthusiasts will contribute to state services, but then again, no one knows what will happen with oil.

The calculation that shows oil production taxes could drop to $12 million in fiscal year 2017 with $35 oil is more than a guess.

With prolonged prices below $40 a barrel, oil production taxes would drop because the companies would be spending more than that per barrel on their operations, the tax department estimates.

The diversified companies, namely Exxon Mobil and BP, gain from profits generated beyond the North Slope with their refining and marketing operations, as those tend to be much more profitable at low prices. But ConocoPhillips isn't in the refining and marketing business anymore, so it faces a harder hit at low prices. The stocks of all three companies are down.

The state oil tax law, which was not designed or modeled with $40 oil in mind, includes a 4 percent gross tax that is supposed to be the minimum floor, payable at any price. But there is a hole in the floor that appears to be getting bigger.

If the big companies generate losses in the North Slope segments of their businesses, those losses can be carried forward and used to reduce the minimum tax below 4 percent and headed toward zero.

Something like that will happen if oil remains below $40 a barrel for the next year and a half, according to a Department of Revenue estimate in late December.

If oil recovers and averages $50 a barrel for this year and next, the production tax would generate $158 million next year and $188 million if the price meets the price forecast released last month. If the average is $40 over that period, however, the total production tax will be closer to $13 million, dropping to $11 million at $30.

Gov. Bill Walker has proposed raising the gross tax to 5 percent and there is talk of fixing the hole in the floor. Look for some legislators to push for a bigger increase in the minimum tax, based on the theory that the state has failed to protect its interests at the low end. The oil industry won't be happy with any increase in the minimum tax.

At prices above $50, a 1 percent increase in the gross minimum adds up to somewhere between $50 million and $75 million per year in revenue.

The state has other sources of oil income — the property tax and corporate income tax might total $300 million in 2017. And as the owner of the land that contains the largest and second largest oil fields ever found in North America, the state also owns about one-eighth of the oil, which it sells at market prices.

With the collapse in oil prices, royalties have emerged as the biggest slice of oil income, but the price drop on world markets means the money is not to be counted on.

If oil averages $50 in 2017, royalties could bring in about $1 billion. At $40, that drops to $720 million. If the current price near $30 persists, state royalty oil would bring in about $500 million.

Finally, the state is paying out hundreds of millions in oil tax credits, mostly to smaller companies. When you include those in the income and outgo calculations, it appears that if oil stays near $30 for a couple of years, the state could see a period when it takes in nothing on oil taxes and royalties combined.

The good news and the bad news for Alaska are the same: No one can predict the future price of oil.

Longtime Alaska journalist Dermot Cole is based in Fairbanks. Email him at dermot@alaskadispatch.com.