Alaska's economy finally begins to thaw
Alaska's economy finally begins to thaw
ANCHORAGE, Alaska: Brooks Range Petroleum Corp., a small independent oil producer here in Alaska's largest city, plans to increase its workforce to more than 300 people next year, up from 50 this year and only 15 people in 2016 , according to executive director Bart Armfield.
These hirings are not great news in the economy of the United States, since lowest unemployment rate In almost 50 years. But they are in Alaska, which has been trapped in a recession for the past three years, while the rest of the United States has enjoyed the largest economic boom in a generation.
Downgraded by low oil prices and fiscal turbulence in state government, Alaska's unemployment rate peaked at 7.3% earlier this year, about 3 percentage points higher than the national rate. Its September rate of 6.5% remained the highest of the states, according to the Bureau of Labor Statistics.
Now, the State of the last frontier is finally ready to join the rest of the US economy, thanks to the recovery of oil prices and political commitments in the state capital, Juneau.
The change was evident one day before this month, as the long days began to shorten and the leaves changed color. Residents were busy shopping on facades covered with posters announcing an exclusive Alaska sale type: discounts linked to annual oil royalty checks that go to each man, woman and child, which increased 60% this year.
The Anchorage metropolitan area, which represents more than half of the state's population of 740,000, will emerge from recession in the first quarter of 2018, according to a forecast by the non-profit organization Anchorage Economic Development Corp.
Alaska as a whole is likely to show up soon after, given the role of Anchorage as a key economic indicator of the state, said Bill Popp, the group's CEO.
Alaska's economy has benefited from a multi-year fight between Governor Bill Walker and the legislature over budgetary issues, including: How to use the Alaska Permanent Fund of $ 65 billion., an investment fund fueled mainly by oil royalties. In 2016, Mr. Walker reduced by half to $ 1,000 the dividend checks that Alaska receives from the fund, to help the state government funds services that lack cash, including public safety.
Mr. Walker's decision to cut back that fund has been a key criticism of two rivals, Republican Mike Dunleavy and Democrat Mark Begich,Seeking to overthrow independent politicians. next month. On Friday, Mr. Walker announced that he would. suspend his candidacy for reelection.
Bill Popp, president and chief executive officer of the Anchorage Economic Development Corporation in Anchorage, Alaska, which forecasts he will emerge from a three-year recession in the first quarter of 2019.
Photo:
ASH ADAMS for the Wall Street Journal
Alaska was not the only state dependent on oil Hit hard by the fall in oil prices. four years ago. North Dakota, Wyoming and Louisiana have all had slowdowns. But Alaska fell harder and has been the slowest to recover.
Oil and gas account for approximately 27% of Alaska's gross domestic product, compared to 2% of the national GDP. The price per barrel of North Slope Alaska crude fell from more than $ 100 per barrel in 2014 to just $ 27 in 2016. Since then, they have slowly rebounded to more than $ 80.
In the 1970s, Alaska resisted the national recession due to a boom related to the construction of the Trans-Alaska Pipeline, and it remained during the recession in 2008 due in part to the fact that oil prices remained high, economists say.
The oil companies have said they are planning an investment of $ 20 billion in development and production costs of expanded fields over the next few years. Brooks Range Petroleum is dusting off a nearly $ 500 million drilling project that was put on hold when the recession occurred.
Nine Star Education and Employment Services, a nonprofit company that works in Anchorage, helped more than 3,000 clients return to work in the fiscal year that ended July 31, a 27% increase from the previous year, he said. the Executive Director, Ruth Schoenleben. Among them was Jasmin Smith, who returned to work as a labor force trainer in 2017 after being unemployed for two years, during which time she went to public assistance and returned to her parents.
Jasmin Smith teaches a business class for entrepreneurs in downtown Anchorage. Last year, Ms. Smith regained her job after finishing public assistance during a recession caused by the collapse of oil prices.
Photo:
ASH ADAMS for the Wall Street Journal
"As soon as the recession hit, my clients felt that our services were a luxury and not a necessity," said Ms. Smith, 33, a 4-year-old single mother of twins.
Governor Walker and the legislature were able to reach a budget commitment that increased annual dividend checks to $ 1,600.
That infused an estimated $ 1 billion in the Alaskan economy after the checks were released on October 4, which led airline companies to car dealerships to offer "PFD" or Permanent Fund Dividend, sales .
That same afternoon, Gabby Anderson, 22, visited Mountain View Sports Fly Shop in South Anchorage to spend part of her dividend. "I'm treating myself," said Ms. Anderson, an emergency medical technician who was buying woolen clothes.
The nascent recovery It's fragile, even though. Another sharp drop in oil prices could derail the economy again. In the long term, business leaders say that Alaska needs to diversify its economy.
"Oil was the horse we rode on," said Ethan Berkowitz, Mayor of Anchorage, who is promoting the growing local industries such as health and logistics. "Now we need him to be one of them."
Larry Vendel, exploration manager at Brooks Range Petroleum Corp., works in a common area at the oil producers' offices in downtown Anchorage as the company prepares to increase its staff for a major drilling project.
Photo:
ASH ADAMS for the Wall Street Journal
Write to Jim Carlton in jim.carlton@wsj.com
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