Alaskans' new oil dividend: $878

ANCHORAGE, Alaska -- This is what Alaskans love to crow about to their brethren in the Lower 48, trying to make them jealous that the government gives them money to just live here.

Alaskans got the word Tuesday that this year's Permanent Fund Dividend will be $878. Almost all Alaskans -- nearly 647,000 people -- will receive a dividend, their yearly share of the state's oil wealth.

It's less than last year's dividend of $1,174, and the smallest since 2006. The dividend is calculated on the amount of investment earnings over a five-year average, and includes 2009, when the fund saw its first net loss.

New residents must live in Alaska for a year to benefit from the permanent fund, established in 1976 after the North Slope oil discovery.

But what your Alaskan friends may not tell you is that the yearly bounty barely makes a dent in the higher cost to live in the nation's northernmost state.

Living in Alaska costs more since most everything has to be shipped in. In fact, 90 percent of all goods sold in the state pass through the Port of Anchorage.

There's no such thing as a dollar menu at a fast-food restaurant in Alaska -- it's more like a $1.50 or $2 menu. And there's a reason why many TV commercials advertising prices have a line in small print at the bottom saying prices may be higher in Alaska and Hawaii: It's because they are.

Here's a look at what this year's dividend will get you in Alaska:

About $70 short of one month's rent for a single-bedroom apartment in Juneau, the state's capital.

Not quite 11 days' worth of kibble, meat and fat supplement for winter feeding for 46 sled dogs at Paul and Erin McLarnon's Broken Runner Sled Dog Kennel in Willow, Alaska.

A round-trip airline ticket from Anchorage to Seattle, but nothing left over for an in-flight cocktail. A round-trip ticket between Omaha, Neb., and Miami (roughly the same distance) would run half as much.

About 163 gallons of home heating fuel ($5.39 per gallon delivered) in Naknek, a Bristol Bay village about 300 miles from Anchorage.

And while many would consider the Permanent Fund Dividend free money, it's really not. Even though there's no state sales tax, the IRS taxes Alaskans on this income.