Alaska oil prices closed below $40 a barrel Thursday for the first time in nearly four years.

With oil prices around the globe, Alaska prices have been smacked by slackening demand amid a worldwide economic recession.

On West Coast open markets, North Slope oil was priced at $39.17 a barrel, its lowest price since early 2005.

The decline of oil prices around the world has been sharp and stunning since they peaked at about $145 a barrel just four months ago. While wounding places that produce oil, like Alaska, the unprecedented drop has provided relief to consumers and businesses.

In Alaska, the plunge is happening as the governor's office is drafting a budget proposal for the state fiscal year that begins next July. The budget will follow a record $6 billion in spending of general state revenue for the current fiscal year, a budget written when oil prices were at breathtaking heights last spring.

The new budget will need oil prices well above today's prices to let the Legislature maintain spending without drawing down state savings accounts.

Gov. Sarah Palin said on Thursday that tapping savings might be necessary.

Read the full story at adn.com.