This is the second of three columns dedicated to making the case that Alaska, like the rest of the world, can move beyond oil and into the clean energy economy.
Alaska's economy was small yet stable pre-pipeline. As noted in my previous column, if we get the funding reliance switched from oil revenues to the earnings of the Permanent Fund, then we can start thinking beyond oil. Building on the fundamental premise that the fiscal gap is solvable (once political will kicks in), let's look at how far we've come since the pipeline boom days and ask if this is enough to build on.
In the interest of full disclosure, my first job in Alaska (1977) was driving a taxi in Anchorage. Although I avoided the strip clubs in Spenard and never took a call from Chilkoot Charlie's, I got a front-row seat to a state flush with pipeline money. Anchorage then had all the trappings of a city but few of the benefits. Restaurant choices were limited and always crowded, the roads were full of potholes, and nondescript apartment buildings and strip malls seemed to be on steroids. Now, in 2018, Anchorage is being evaluated by U.S. News and World Report as one of the 100 best cities to live in. Here is how the magazine describes Anchorage: "A young, thriving, culturally rich city (that) houses galleries and fine-dining restaurants in its urban nucleus, but is just minutes away from some of the last true, unspoiled wilderness in the U.S."
[Part 1: Beyond oil: Alaska's first step is a sustainable budget]
As much as Anchorage has changed since 1977, so too has the Alaska seafood industry. At the time of the pipeline boom days there were no quota programs for halibut, pollock or crab. Once Alaska fisheries switched from a race-for-fish structure to a quota program that allowed for months of fishing instead of days, stability and new opportunities abounded. Just look at the price of halibut now. Alaska produces half of the nation's seafood, and all major fisheries are certified as sustainable by the Marine Stewardship Council, an international eco-label program I once worked for as regional fisheries manager. Through the Community Development Quota program and regional marketing efforts, the benefits of the seafood industry reach throughout Alaska. Also, since the time of peak Prudhoe Bay production, the salmon industry weathered the market disruption of farmed salmon and has come through stronger, with improved quality and many more value-added products. I agree with Sen. Dan Sullivan, who describes Alaska as the "superpower of sustainable seafood."
The next economic sector that has blossomed in this same time period is tourism. According to a 1997 report, "Alaska Economy and Population, 1959-2020" by the Institute of Social and Economic Research, "Tourism has been one of the fastest growing basic industries, increasing at estimated 5 to 7 percent annually." Essentially, tourism has transformed the economy of towns from Ketchikan to Seward to Fairbanks and all the way to Nome. At the time of the pipeline, tourism was a nascent industry. Last year, more than 2 million visitors came to Alaska.
At the time of this growth in tourism, the forest products industry was undergoing a major decline with the close of two pulp mills in Southeast. Today the forest products industry is less than a tenth of what it was in its heyday. However, there is a new industry building around second-growth wood and biomass. In about 10 years the inventory of second-growth forest will peak, and with retooling of sawmills, these forests could be sustainably harvested into the future.
With the opening of the Red Dog Mine, the Greens Creek Mine, the Donlin Mine and the Kensington Mine, mining continues to be a significant contributor to Alaska's economy. According to the website of the Alaska Miners Association, "Mining is a growing force in Alaska's economy, providing jobs for thousands of Alaskans and millions of dollars of personal income throughout Alaska."
The other core industry that's been around since the pipeline days is construction. According to a 2016 report by ISER, "The construction trade is Alaska's third largest industry, paying the second highest wages, employing nearly 18,000 workers with a payroll over $1 billion. It accounts for 20 percent of and contributes $7 billion to Alaska's economy." While construction spending related to oil and gas and the state's capital budget is expected to decline, the construction trade is expected to remain vibrant, especially if deferred maintenance and infrastructure projects become government priorities.
Now let's look at the industries we have now that we didn't have at the time of the pipeline. At the top of this list are health care and air cargo. According to the Alaska Department of Labor and Workforce Development, "Alaska's health care industry has grown steadily during the past 20 years, and that trend is expected to continue as Alaska senior population increases." In 2010, the industry provided 31,800 jobs and had a payroll of $1.53 billion.
While flying into Anchorage for health care or other needs, it's easy to notice the expansive air cargo facilities, but did you know that the Ted Stevens Anchorage International Airport ranks fourth in the world for cargo? As noted by Bill Popp, president of the Anchorage Economic Development Corp., "The airport is a big source of job growth and it helps stabilize other parts of the economy." With the expansion in online commerce, it's likely that air cargo will remain an economic force in Alaska.
Add to this list a state-of-the-art telecommunications network that serves the entire state, the maturation of village and regional Native corporations, the growth of the university system and an expanding arts and entertainment industry, and you see that Alaska has significantly diversified since Big Oil first came into our lives.
I am not alone in this assessment. ISER economist Mouhcine Guettabi, in October 2017, spoke about "Alaska's Economy: Then and Now," concluding that Alaska is no longer characterized by the boom-and-bust cycle. Instead, "Alaska's economy is (now) characterized by relatively slow and steady growth in population and employment driven by growth across many sectors such as the federal government, mining, tourism, air cargo, health care, and retail trade, and with significant regional variation. Alaska has considerably changed along almost all dimensions."
To someone who started as a taxi driver, invested in Silver Lining Seafoods, organized Salmon Forums, served on the Tongass Advisory Committee, owned a bed-and-breakfast and worked for Native organizations, I've seen the breadth of change Guettabi speaks about. As an elected official and engaged resource professional, I've stayed close to economic developments. The Alaska I know and love has more than one economic driver. Yes, we may have been funded by oil. But we were founded on fish, and now with wired wilderness, a thriving health care industry, a global cargo center and millions of visitors every year, we are so much more.
The last column in this series will look at ways Alaska can build on these strengths while moving into the clean-energy economy.