These are strange times. Scientists predicted events like this, but few paid attention. An invisible virus is grinding down almost every sector of our economy. Unbelievable.
Usually when I write this column, I find positive things to say about possibilities, opportunities and strengths in dark times. This time I’m finding it hard.
Our world is upside down. Never could I have contemplated North Slope oil production being deliberately throttled back, and people talking realistically about shutting down the trans-Alaska oil pipeline temporarily. This could happen if Americans don’t start driving again and West Coast refineries don’t start buying more of our oil.
Thoughts of a robust tourism season are largely wiped out. Hundreds of small businesses that depend on summer visitors hope some will still show. More Alaskans should get out to enjoy our state to help them.
It’s too early to know how commercial fisheries will fare. There are hopes that harvesting and processing plant workers can work safely, and keep the coronavirus disease COVID-19 at bay. Meanwhile, will we be able to sell our fish as we have in previous years?
A big surprise for me is that Alaska’s health care providers, on the front line battling COVID-19, are also financially stressed and that health care workers are among the biggest groups of the newly unemployed. That happened because we had to stop all non-emergency health care, which denied revenues to health providers and jobs for health workers. It’s another side effect of COVID-19.
We’ll muck through this thing. We’ve got to solve the health problem before tackling the economy, and there’s still much we don’t know about this virus. I don’t believe in reopening the economy quickly at the risk of lives, but too many politicians on the national level, pushed by big business and right-wing groups, seem willing to do that.
Alaska seems in better shape in controlling the virus, and we’re one of the first states to gradually reopen. I hope the step-by-step process endorsed by Gov. Mike Dunleavy and Mayor Ethan Berkowitz works, but we’ll have to wait to see.
There are always positives, of course. The oil is still there, and in fact explorers found even more last winter before having to shut down drilling because of the virus. Our salmon will always come back, too, at least until climate change alters the ocean’s chemistry.
Miners are always upbeat, no matter what it seems. Alaska’s handful of large producing mines are doing well and keeping their workers safe. Placer miners, a tough and independent breed, are heading for the gold creeks.
What we really have here is a pause. Therein lies opportunity.
As grim as things appear, let’s take this opportunity reflect on how we do things, to recalibrate, do them differently or more efficiently, and to think about new products and markets. Everything is on table, suddenly. This is no time for naysayers.
A lot of things will be different as Alaska’s, and the nation’s, economy emerges. Extended working from home is shown to be popular and effective nationwide. As this becomes more widely accepted the implications for drive time and air travel, and fuel use, are immense. The jury is still out on distance education for schools and universities, but we’ll likely see more of it. Air travel, tourism and even the battered cruise industry will be reinvented in forms we can’t yet imagine.
As for Alaska, last month I wrote in this column about how we’re sure to see continued spot shortages in the food supply chain, and that we should become more sustainable in regional supply through agriculture.
So how about it? We’ve talked for years about getting more locally produced foods into schools and prisons, two markets that could help farmers jump-start larger production for all of us. Can we cut through red tape and make this happen?
Private companies take advantage, in times like this, to rethink how they do things. Here’s one example from the petroleum industry: The last time oil prices crashed was in late 2015. It was the start of a long recession for Alaska. ConocoPhillips, a major North Slope producer, slashed spending on drilling and other field work, as it is doing now.
But the company also used the time-out to challenge its employees to find ways to do things, and in particular solve a chain of technical problems related to development of viscous oil, a thick, gooey kind of oil that had defied being produced economically.
Engineering teams found new approaches and as oil prices gradually recovered ConocoPhillips was able to significantly expand a small viscous oil project. Now a second expansion is planned, though it’s now on hold until prices recover.
ConocoPhillips isn’t alone. Based on this, I’m confident Alaska’s oil and gas industry will take care of itself, although the adjustments are painful.
All through the private sector companies are rethinking what they do. We should encourage it in the public sector, and there are challenges aplenty we could tackle. Last week in a legislative committee meeting, state Rep. Sharon Jackson, R-Eagle River, asked about promising work done by the University of Alaska Anchorage School of Engineering on technical innovations for rural water and sewer systems.
We still have villages without running water, a serious hazard in a health emergency. Hundreds of millions of COVID-19 federal dollars will soon be coming into Alaska, so let’s take up Rep. Jackson’s suggestion and solve this problem.
There’s also a $2 billion backlog on maintenance on Alaska public buildings, including state, university and schools. We’re going to have to do a lot of capital configuration as we emerge from COVID-19. Infrastructure work creates jobs, so let’s form partnerships and get moving.
A huge asset is Alaska’s Native corporations, and most are invested in Alaska businesses and have substantial resources. They could play a role in infrastructure renewal, as could Alaska tribal entities with their own access to federal funds.
When it comes to social responsibility, Alaska Native corporations deserve a mention. It is striking to me how several corporations, among them Ahtna Inc., Doyon Ltd., Bering Straits Native Corp. and Calista Corp. are paying early or special dividends to help their shareholders in these tough times. Some of the dividend outlays are substantial, though not quite on the scale of our state’s Permanent Fund dividend.
Many Native corporations are heavily engaged in oil support, particularly Doyon. Despite big, sudden hits to the bottom line, Doyon, Ahtna and other Native corporations moved quickly help their shareholders. This gives me comfort. We take care of ourselves, so we’ll all get through this. We’ll build a better Alaska when we do.
Tim Bradner is co-publisher of the Alaska Economic Report and Alaska Legislative Digest.
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