By WIN GRUENING
With all the negative economic news making headlines in Alaska, sometimes it’s tough to stay positive. But we have plenty of reasons to be thankful.
Imagine where Alaska would be if we didn’t have core industries supporting our economy every day – 365 days a year.
A past column touched on some bright spots: legislation authorizing drilling in ANWR, the increased military expenditures in Alaska for missile defense, regulatory reform, and Alaskans appointed to high profile Federal agency positions directly affecting our state.
These developments are important, but we need to recognize the continuing importance of Alaska’s major private-sector industries: oil & gas, mining, seafood and tourism.
In 2017, Prudhoe Bay production and Trans-Alaska Pipeline operations celebrated 40-year anniversaries. Since pipeline operations commenced, 17.5 billion barrels of oil have been transported from the North Slope to the Valdez Marine Terminal. Despite the recent downturn in oil prices, Alaska’s oil industry has reversed recent production declines and remains the single most important economic engine in Alaska.
The positive impacts of this sector cannot be overstated. According to a recent McDowell Group study, oil and gas industry spending in Alaska accounted for 45,575 jobs and $3.1 billion in total wages in Alaska last year. After accounting for state and local government spending of taxes and royalties paid by the industry, an additional 58,300 jobs and $2.9 billion in wages were added to Alaska’s economy.
The total, 103,875 jobs and $6.0 billion in wages, represents nearly a third of wage and salary jobs in Alaska.
Oil development is often targeted for additional burdensome regulatory review and taxes – advocated by environmental groups opposing any expanded operations. Yet, if not for this industry there would be no Permanent Fund to cushion the effects of our current recession.
The mining industry, while not as large in scale, remains a growing force in Alaska’s economy. With over 8,600 jobs and $675 million in total payroll the mining industry accounted for some of Alaska’s highest paying jobs with an estimated average annual wage of $108,000, over twice the state average.
The mining industry is particularly important for residents of over 50 communities throughout Alaska, half of them in rural Alaska where jobs are scarce. Northern Southeast Alaska has benefited greatly from its two mines, Kensington and Greens Creek. Currently, Greens Creek Mine is Juneau’s largest private employer and property tax payer with over $1.4 million in annual property tax payments.
The seafood industry, our state’s largest exporter, is a major factor in our economy – employing 60,000 workers earning $1.6 billion in wages and accounting for $9 billion in total economic activity.
The demographic and geographic diversity of participants in this industry is unique. 31,580 fishermen earned income in Alaska’s commercial fisheries (over half were Alaska residents) including skippers and crew. Those fishermen operated a fleet of 8,600 vessels.
Alaska’s 2014 seafood harvest of 5.7 billion pounds had a total ex-vessel value of $1.9 billion. This production generally places Alaska sixth in seafood export value compared to all other seafood producing nations.
Our fourth major industry, tourism, or more broadly, the visitor industry, continues to prosper in our state.
In 2016, 1.8 million out-of-state visitors came to Alaska – the highest volume on record. 55 percent came via cruise ship, 40 percent arrived by air, and 5 percent were highway/ferry visitors.
Southeast is the most visited region in Alaska, capturing 67 percent of the overall market, followed by Southcentral (52 percent) and Interior (29 percent). Alaska visitors spent an average of $1,057 per person here (not including transportation to or from the state or any cruise/tour packages).
The cruise industry’s visitor volume creates tremendous multiplier effects throughout the economy. In Juneau (and other SE ports) marine passenger fees add tens of millions of dollars to municipal coffers.
Looking at these numbers, it’s hard to understand why responsible economic development always seems to generate such controversy.
These four major industries produce the oil, gas, minerals, seafood, and experiences bringing outside dollars to our state. Along with smaller private-sector producers, they provide the jobs and revenues that support government services, non-profits and associated service industries: retail, construction, medical, arts and culture, and transportation among others.
They deserve, but often don’t receive our gratitude.
But there’s more to be grateful for (just to name a few):
- Service organizations whose members volunteer to help those less fortunate;
- State-of-the-art medical facilities;
- Perseverance Theatre (have you seen “Steel Magnolias” yet? It’s terrific);
- Alaska Airlines – whose regular and dependable service continues to garner awards;
- Juneau’s superb municipally-provided recreation facilities;
Many states (or countries) would love to have the diversity and richness of economic potential we have supporting our communities and quality of life.
We may not agree on everything, but can we agree on that?
Win Gruening retired as the senior vice president in charge of business banking for Key Bank in 2012. He was born and raised in Juneau and graduated from the U.S. Air Force Academy in 1970. He is active in community affairs as a 30-plus year member of Juneau Downtown Rotary Club and has been involved in various local and statewide organizations.