Alaskanomics

Private Mineral Rights Underpin Success of Shale Gas Boom; Oil Development Hampered by Federal Government

Lucian Pugliaresi, writing in an opinion piece in today's Wall Street Journal, pointed to the success of shale gas production in Texas, Arkansas, Oklahoma, Virginia, West Virginia, Pennsylvania and North Dakota with the question: What do these states all have in common besides interesting geology? Their federal land holdings are extremely small and mineral rights are in private hands.

Pugliaresi, President of the Energy Policy Research Foundation, contrasted that success with reserves on the enormous landholdings of the federal government that are subject to "endless" federal environmental reviews, congressional oversight, and permitting delays. Using Shell's experience in Alaska as an example, Pugliaresi called for the federal government to make more land available and minimize the regulatory burden on companies to realize America's oil and gas potential.

Pugliaresi will be speaking in Alaska on April 20, 2012 as part of Northrim Bank's Oil and Gas Speaker Series, in partnership with the Alaska World Affairs Council.

Download Lessons of the Shale Gas Revolution

Alaska's Foreclosures in Progress Lowest in the Nation; Subprime Delinquencies Half of U.S. Average

The second quarter 2011 survey by the Mortgage Banker’s Association shows that Alaska continues to have the lowest level of problematic subprime residential loans in the country. The report also indicates Alaska has comparatively low levels of delinquencies and foreclosures for all types of mortgage loans in the United States.

For the last two years in Alaska the percent of foreclosures started in a given quarter were about 0.5% of the total number of mortgages outstanding. This improved to 0.4% in the second quarter of 2011 and is about half the national average of just under 1%.

The total inventory of foreclosures in process is only 1% in Alaska, while the country has a much larger lingering foreclosure inventory at 4.4% due to higher rates during the recession and longer resolution times.

Subprime lending to traditionally non-qualified borrowers was a large contributing factor to the national mortgage problems. The rate of delinquencies and foreclosures on subprime loans is significantly higher. However, Alaska is in a far better position and again leads the nation in this important category. Subprime foreclosures in Alaska are at 4.1% while the national average is 14.9% and the second lowest state is Wyoming at 6.9%.

The survey covers just over 95,000 mortgages in Alaska and approximately 7,500 or 8% were considered subprime. Of those 7,500 subprime loans Alaska’s subprime delinquency rate is 11.1% compared to the national average of 23.5%. Delinquent loans are more than 30 days past due, but not yet in foreclosure. Alaska’s rate is more than 6% lower than the second place state Colorado at 17.8%.

Alaska does trail North Dakota, South Dakota and Wyoming in the level of overall delinquent loans, ranking fourth best out of 50 states. Alaska’s delinquency rate is 4.5%, while the U.S. average is 8.1%.

 

Alaska's "Post-Prudhoe Economy": Will we Make the Right Choices?

The University of Alaska's Institute of Social and Economic Research (ISER) released a new publication as a part of the the organization's 50th anniversary celebration. Author Scott Goldsmith points out that, over the last 10 years, a combination of high oil prices and revisions in Alaska's oil production taxes have caused state government revenues to "skyrocket" despite a 40% drop in oil production over the same time period. Goldsmith lays out a strong case for Alaskans to proactively manage our assets to ensure that Alaska has a good economic future not only for the current generation of Alaskans, but for generations to come. That will require long term thinking on the part of all Alaskans, but particularly by our elected officials. Read the publication here.

EIA Forecasts Lower Oil Prices; Continued Decline in Alaska Oil Production

The Energy Information Administration (EIA) released their September 2011 Short Term Energy Outlook. Compared to the August report, the EIA "substantially lowered" their outlook on the U.S. economy, resulting in lower growth in petroleum demand and prices increasing to $103 per barrel by 2012, down from the $107 per barrel forecast in the August report.

The report forecasts that Alaska oil supply (production) will decrease from an average of 600,000 barrels per day in 2010 to 520,000 barrels per day for 2012, and oil from Alaska will decline from 11% of domestic production in 2010 to 9% of domestic production for 2012.

The EIA report notes that oil prices are subject to "inherent uncertainty," with upside risks that would increase oil prices - unrest in oil-producing regions and more robust demand than forecast - balanced by downside risks that would reduce oil prices - continued global economic weakening and the possibility that Libya's oil production and exports will resume sooner than forecast.