Alaskanomics

2014 3-Year Outlook Luncheon

The Anchorage Economic Development Corporation (AEDC) hosted its Annual 3-Year Outlook luncheon today. The event always packs the house and this year included an update from Mayor Dan Sullivan on Investments in Anchorage, the 3-Year Outlook from AEDC President & CEO, Bill Popp, and a Keynote Address from Terry Jones, Founder & Former CEO of Travelocity.com, and Chairman of Kayak.com.

Mayor Sullivan’s presentation outlined the strength of investments throughout Anchorage in the past few years and gave examples of continued growth for the Municipality. He highlighted that the Municipality is currently retiring bonds faster than they are being incurred, which is reducing debt for the city. There has been over $372 million spent in road improvements since 2009. Community and neighborhood parks have also been a focus in the past few years. Since 2009, there have been 100 park improvement projects, totaling $20 million. Park rehab has been assisted by more than 460,000 volunteer hours. There will be another 8 neighborhood park projects in 2015.

The Mayor also outlined non-government projects that are helping Anchorage thrive as the Municipality prepares to celebrate Anchorage’s Centennial in 2015. Special events have already started and there are many great activities on the calendar throughout the remainder of 2014 and into 2015. More information about Anchorage’s Centennial Celebration can be found at www.Anchoragecentennial.org.

Bill Popp then took the stage to present the 3-Year Economic Outlook for Anchorage. He started on a high note, saying that the Anchorage Consumer Index is at an all-time high of 63.3 percent. This figure includes three statistics. The first is local economic confidence at 65.2 percent; personal finance confidence at 67.1 percent; and future expectations at 60.4 percent. While all three represent a good outlook, respondents were not as confident in the future as they were in the current economic situation.

The 3-Year Outlook looks at population, employment, personal income, Anchorage airport passenger numbers, air freight volume, building permit values, port volumes, Anchorage visitor industry, and Alaska North Slope crude oil prices as indicators of the economic strength in Anchorage. Highlights from Popp’s presentation include a 4.5 percent growth in personal income. This is likely to be bolstered by a string of larger Permanent Fund Dividend checks in the coming years. Experts are predicting a boost due to loss of 2008 and 2009 averages when oil prices were significantly lower than they are today.

Air travel is also expected to increase in the coming years and is predicted to see record or near record numbers by 2017. Individuals and families are traveling again after holding off during the recession. This is great news for Anchorage and all of Alaska. The Anchorage Visitor Industry as a whole is doing well because the great work of Visit Anchorage, who promotes travel to Anchorage at industry shows throughout the world. Their hard work is really paying off in the level of visitors coming to Anchorage.

Air freight volume and Port of Anchorage volume has been relatively flat in recent years. The freight volume forecast can be attributed to a shift in the logistics/supply industry. The industry is becoming more efficient and able to use surface transportation more than before, which reduces air freight in and out of Anchorage. They are also using larger planes, which increases the amount of freight being carried by fewer planes. The larger planes are able travel different routes, that do not always include stopping in Anchorage. Much of the volume that comes through the Port of Anchorage is fuel and with the loss of Flint Hills and fewer planes coming through with freight, the fuel volume has decreased in recent years. There has been a slight recovery from the Flint Hills loss, but not enough to give a huge upswing.

Popp concluded his presentation with his thoughts on why it is important to 'Vote No on 1' in the upcoming primary election. The Board of Directors of AEDC supports 'Vote No' because they believe that a stable tax structure is the way to keep Alaska’s economy strong and therefore keep Anchorage’s economy strong. This is one way that we as citizens can have some say in the future of our city and state. He encouraged everyone to get out and 'Vote No on 1' on August 19. With the large amount of applause from the crowd, it was obvious that many in the room supported this stance.

A full luncheon recap can be found at www.aedcweb.com, as well as the Anchorage Consumer Optimism Index, and the presentations from the luncheon.

Unemployment Rate at 6.4 percent in June

The Alaska Department of Labor and Workforce Development released the latest unemployment numbers today. The unemployment rate in Alaska remained virtually unchanged for the month of June. The seasonally adjusted rate was 6.4 percent in June, up slightly from 6.3 percent in May. The national average was 6.1 percent in June. Alaska is back to the pre-recession levels and has remained fairly steady since January 2013.

As expected, areas with highly seasonal work showed a reduction in the unemployment rate. The lowest rate was in the Municipality of Skagway at 1.4 percent. Bristol Bay Borough was also very low at 1.9 percent. The Wade Hampton Census Area held steady with the highest rate in the state. Their June unemployment rate was 26.1 percent.

For detailed employment estimates, visit http://live.laborstats.alaska.gov/ces/

 

 

Point Thomson Update

The Anchorage Chamber of Commerce’s Make it Monday Forum continues to bring important issues to the forefront for the business community. This week, they hosted Karen Hagedorn, Alaska Production Manager, with ExxonMobil for an update on Point Thomson and the Alaska LNG project.

To date, ExxonMobil and its partners BP and ConocoPhillips have spent $2 billion on the project. The project is on target to start up in early 2016. The team is about halfway through the initial production that will establish critical infrastructure that includes housing facilities, expansion of the gravel pad, fuel tanks, an onsite airstrip, and a service pier. There is also a 22-mile export pipeline that will have a capacity of 70,000 bpd at completion. There will be three wells, two on the central pad and one on the west pad, and the total area for the project will be 55 acres. During the summer of 2015, process buildings will be installed at Point Thomson. These buildings are under construction and will be barged to the site next summer.

This past year, there have been about 1,200 people working statewide on the project with 700 positions on the North Slope. 85 percent of these workers are Alaskan. There are 92 companies working directly on the project and 80 percent of those companies are Alaskan. Hagedorn expressed the importance of working with the local companies and hiring Alaskans. She also noted that there are two classes of operators that are currently being trained in Southern California, and Alabama. Both classes are looking forward to escaping the heat and coming back to Alaska to work.

Hagedorn also spoke about the Alaska LNG project. Point Thomson will be an anchor in this project and operators will work closely with the other producers on the North Slope and at Prudhoe Bay. She believes that the future of Alaska energy is gas development.

In order to have a strong future, tax reform is important. The current tax structure that was put in place this past January makes Alaska competitive, predictable and durable for oil and gas development. Alaska is the only state that has seen a decline in production since 2007. Producers indicate that the tax structure under ACES made it very difficult to plan for the long-term. The new structure makes Alaska a much more durable place to do business. The current structure incents production which is more aligned with the business model that production companies use for planning. It is aligned with what the state wants; more production, and what the industry wants; stability and durability. The new structure is already working and needs to be kept in place to allow for further growth and development.