Alaskanomics

Alaska’s population grows by 8,000 in 2011

The most recent State Department of Labor estimate for Alaska's population is 722,190.  That is a 1.1% increase in 2011 resulting from an additional 8,044 people.  Nearly all of the growth is due to natural increase.  There were 11,658 births reported and 3,728 deaths.  The net migration of people moving in and out of the state was a change of only 114 people.

The Municipality of Anchorage population is estimated to be 296,197.  This is an addition of 2,987 people over last year, or a 1% change.  This is all due to natural growth, as there was a net out-migration of 355 people reported.  Anchorage has added approximately 36,000 people since the year 2000.

The Mat-Su Borough population increased by nearly the same amount as Anchorage over the last 11 years by adding over 32,000 people.  The Mat-Su population has been growing at roughly 4% a year for the last decade to an estimated 91,697 people.  The Mat-Su will likely pass Fairbanks as the second most populous region of the state if these growth rates continue over the next decade.

The interior region is home to an estimated 112,170 people with about 98,000 residing in the Fairbanks North Star Borough.  Fairbanks is estimated to have lost 381 people in 2011.  The natural increase of birth minus deaths added 1,351 people, but was offset by a negative out-migration of 1,732 people.

Alaska adds 3,700 jobs in 2011, a 1.1% improvement

The State Department of Labor revised employment statistics reported a 1.1% increase in the monthly average number of payroll jobs in Alaska in 2011.  This was an increase of 3,700 jobs on average over the 2010 figures.

There were 328,800 jobs in Alaska on average throughout the year.  Alaska’s employment situation is highly seasonal.  There was a peak of 354,400 jobs reported in July and a low of 308,800 jobs in January of 2011.  These figures do not include uniformed military or the self-employed.

Health Care contributed the largest growth in jobs in 2011.  This sector added 1,300 or 4.1% more than the prior year.  Health Care has been a major driver of job growth in the state for more than a decade.  Professional Services added 1,000 jobs, a 3.7% gain for this sector. 

Leisure & Hospitality climbed by 900 jobs mainly due to gains in Food Services & Drinking Places.  This was a 2.8% increase.  Seafood Processing grew by 600 jobs during an active fishing season, a 6.1% improvement.

Mining, which includes Oil & Gas, is another important contributor adding 500 jobs.  Most of the gains were from exploration activity and maintenance work.  Air Transportation increased by 200 jobs, which was a 3.4% gain.

The Construction sector reported the largest decrease of 900 jobs or -5.9%.  Government shrunk by 600 jobs, with 500 of the decrease coming from a reduction in federal government employment.  This loss accounted for only 0.7% of the government workforce.

Several sectors reported losses of 100 jobs.  They include Wholesale Trade, General Merchandise Stores, Telecommunications, and Financial Activities.

Increased domestic production can impact gasoline prices today; "Vast Opportunities" in Alaska

In testimony before the U.S. House of Representatives, Lucian Pugliaresi, President of the Energy Policy Research Foundation, assessed the causes of current high gasoline prices and made the case for increasing domestic oil production now.

With 85 percent of the cost of gasoline determined by crude oil prices, any efforts to reduce gasoline prices must focus on reducing the price of oil. Pugliaresi argues that without growing U.S. production on private lands in North Dakota, Colorado and Texas, gasoline prices today would be even higher. He called for an "aggressive" program to expand leasing on federal lands in the west, accelerate offshore leasing, and open up the "vast opportunities" in Alaska.

Addressing the argument that increasing domestic production will take too long to impact gasoline prices today, Pugliaresi noted that crude oil prices are determined not only by current production, but by market expectations of future production - a point that he illustrated with historical examples.

Pugliaresi will be speaking at an Alaska World Affairs Council luncheon in Anchorage on April 20, 2012, as part of the Northrim Oil & Gas Speakers series. 

New housing permits remain low in Alaska for the fourth year in a row

The U.S. Census Bureau’s report on authorized building permits in Alaska shows the number of new housing projects remained under 1,000 units for the fourth year in a row.  In 2011, there were 868 housing units authorized, down from 904 in 2010 and 912 in 2009.

Single-family units accounted for 710 of the permits in 2011.  There were 32 duplexes and 12 triplexes or fourplexes.  Finally, there were 13 permits for structures with five or more units.  These multi-family permits accounted for 114 total housing units.

As can been seen in the graph, new housing activity reached a recent peak in 2003.  The chart goes back to 1980 and highlights the extreme housing boom that occurred in the early eighties following the start of the Trans-Alaska Pipeline.  This was also at a time when Alaska’s population was significantly smaller, so the relative impact of the slowdown in construction after 1983 was more severe.

Less new construction has helped the price of existing homes because there is less competition.  A stable job market and income in Alaska has also kept home prices stable here, despite the national recession and housing market bubble felt elsewhere in the country.

It is important to note that many smaller communities in Alaska do not require permits and are not tracked in this information.  However, it is a consistent data set of Alaska’s largest cities.  Not all of the units permitted are actually built.

Anchorage Inflation Rises 3.6% in 2011

According to the Federal Bureau of Labor Statistics, the Consumer Price Index (CPI) in Anchorage rose 3.6% in 2011.  By comparision, the change for the entire U.S. was 3% for the year.  Anchorage is the only "urban" community in Alaska that is tracked for these national statistics due to its population. 

Anchorage's 10-year average inflation rate has been 2.7% per year.  Average prices have not shown much volitility during the decade reaching a high of 4.6% in 2008 and a low of 1.2% in 2009.  The slightly higher than average inflation in 2011 can mostly be attributed to higher energy prices. 

Energy prices in 2011 were 10.1% higher than the previous year.  Gasoline prices were 14.8% higher and electricity climbed 9.6%.  Food also increased 4.8% in 2011.  After removing these two highly volitile categories, the remainder of the index rose 2.6% over the last 12 months.

The other categories with the largest price increases were seen in Apparel (6.7%), Medical Care (5.8%), Transportation (5.3%), and Housing (2.9%). The price of Recreation showed no change and a decline was measured in Education and Communications (down 0.7%).

Nationwide, inflation has also been most impacted by rising energy costs, up 6.6% in 2011.  Food prices rose 4.7% on average and the U.S. Medical costs rose 3%.  However, housing costs climbed only 1.3% across the county compared to 2.9% in Anchorage.  Housing accounts for the largest share of personal monthly expenses.

Video Clip: Norway’s Oil Fund is Approximately 15 Times the Size of Alaska’s Permanent Fund. How Did Norway Do It?

Norway’s sovereign wealth fund is roughly $600 billion and is the largest such fund in the world. Norwegian Minister of Petroleum and Energy Ola Borten Moe discusses how and why the fund was created, and how much of it the government of Norway uses each year. Borten Moe says that Norway will deliver more cleaner and secure energy in the future. Norway continues to have a goal to reconcile environmental and climate issues with the nation’s role as a large energy producer. Borten Moe says Norway will continue to secure long-term and sustainable energy exploration in the Arctic. Moe was speaking at a Northrim Bank Oil and Gas Speaker Series event in November presented by the Alaska World Affairs Council.

Click Here to see the upcoming schedule in the Northrim Bank Oil and Gas Speaker Series.

North Dakota Revenue Growth at "All Time High;" diversified tax base hitting on all cylinders

Pam Sharp, North Dakota's Director of the Office of Management and Budget, says "Revenue growth is at an all time high" in a recent article in the Grand Forks Herald. A March 13 budget report to the North Dakota legislature itemizes the higher than expected revenues that state's "booming economy" has delivered to their General Fund in the month of February alone:

• Sales taxes of $81 million, $21 million higher than projected
• Motor vehicle taxes of $9.5 million, $3.3 million higher than projected
• Individual income taxes of $18.3 million, $11 million higher than projected
• Corporate income taxes of $10.5 million, $8.7 million higher than projected
• Other categories of taxes, including insurance premiums, financial institutions, tobacco, and liquor taxes are also ahead of projections - only gaming taxes were down in February (perhaps because North Dakota's unemployment rate is the lowest in the country?)

Nearly 90% of Alaska's general fund revenue comes from petroleum, while North Dakota has a much more diversified stream of general fund revenue. In their latest legislative forecast, the general fund budget included:

• 48% sales tax revenue
• 20% oil & gas production and extraction revenue
• 15% individual income tax
• 6% motor vehicle tax
• 3% corporate income tax
• 8% other taxes, fees and interest

Oil and gas production taxes are shared between the General Fund, a property tax relief fund, and a Legacy Fund approved by voters in November 2010. Deposits to the Legacy Fund have already topped $200 million and the fund is forecast to grow to $1.5 billion by June 2013.

Alaska Sets Record of $5.2 Billion in International Exports

According to the U.S. Census Bureau, Alaska set an all-time record of $5.2 billion in direct international exports in 2011.  This is up from a previous record year of $4.2 billion in 2010.  It does not necessarily mean production levels have increased.  The prices of Alaska's natural resources have been strong.  Global demand has been rising due to increased populations and standards of living around the world.

Sales of a variety of seafood products totaled $2.4 billion last year.  This accounted for 47% of all direct international exports from Alaska last year.  This does not account for a large amount of seafood that gets shipped to other U.S. states for further processing and ultimately gets shipped overseas.

Mineral exports of lead, zinc and copper were valued at $1.6 billion, or 31% of all exports.  Additionally, there were sales of precious metals and gold worth $407 million that accounted for 8% of Alaska exports.

Energy in the form of liquified natural gas, coal and other petroleum based by-products added $355 million or 7% of exports.  Forest products were 2% of sales and represented $118 million of international exports.

Asia is still our principal trade market accounting for nearly two thirds of all sales.  For the first time since the statistics have been tracked, Japan is no longer our number one trade partner.  After a decade of growth, China now accounts for 28% of all direct international exports from Alaska.  Much of this $1.5 billion in trade is raw inputs for the emerging market in China.  Some of the seafood products are further processed in China and resold into other parts of Asia.   

Japan was in second position with 21% of sales, followed by South Korea at 12% and Canada at 11%.  A variety of European countries purchase 1% to 5% each of Alaska's exports, primarily fresh seafood and metals for smelting.

Click here to view the full report.

Who Owns "Big Oil?" The Alaska Permanent Fund and Tens of Millions of Americans

The Alaska Permanent Fund as of 12/31/2011 held more than two million shares in ExxonMobil, valued at $181 million - the Fund's second-largest stock holding. The top 50 holdings of the Alaska Permanent Fund include shares in Chevron, Schlumberger, ConocoPhillips, Occidental Petroleum, Royal Dutch Shell and BP. Added together, the Alaska Permanent Fund's top 50 holdings include more than $800 million in petroleum company stock.

Individuals own 70 percent of the U.S. oil and natural gas industry, through individual holdings, mutual funds, IRAs and pension plans. Of the remaining 30 percent, institutions own 27 percent and corporate management holds less than three percent.

Oil and natural gas company ownership is "broadly middle-class:"

• 21% of shares are held in mutual funds. Mutual funds are held by 52.3 million American households, with a median annual income of $80,000 in 2011
• 18% of shares are held through IRAs. More than 48 million American households own one or more IRAs and 80% of those holders had annual incomes of $70,000 or less in 2010.
• 31% of shares are owned by public or private pension plans, including 401(k)s. These funds manage assets on behalf of more than 60 million households in 145 million accounts, with an average value of less than $55,000

For more information, read "Who Owns America's Oil and Natural Gas Companies," published in October 2011 by Sonecon, an economic consulting firm. The research for the study was supported by the American Petroleum Institute and was based on SEC data in October 2011 on the ownership holdings of 173 U.S. oil and natural gas companies, including Conocophillips, ExxonMobil, and several other companies currently operating in Alaska.

Video Clip: The Definition of Energy Security is Different for Each Country and is Based on Whether they are Producers or Consumers

Energy security means something different for importing and exporting countries. Norwegian Minister of Petroleum and Energy, Ola Borten Moe, is a strong believer in an open and transparent market as a key element to increase energy security. Borten Moe discusses energy security as it relates to the interdependence of Europe’s gas consumers and producers. He also discusses the impact of shale gas and the perception of insecurity in European capitals when it comes to the availability of gas. Borten Moe was speaking at a Northrim Bank Oil and Gas Speaker Series event in November presented by the Alaska World Affairs Council.

Click Here to see the upcoming schedule in the Northrim Bank Oil and Gas Speaker Series.