Alaskanomics

2015 Jet Fuel Statistics Uncover a Bright Spot in Alaska’s Economy

By: Blythe Campbell

The U.S. Energy Information Administration (EIA) has released some new estimates for 2015 energy consumption, prices and spending. Final data will be released in June 2017. Jet fuel estimates were updated in October 2016 for 2015.

According to the Alaska Department of Natural Resources, in their December 2015 Alaska In-State Refining Study “jet fuel accounts for nearly half the demand for petroleum products in the State, making Alaska the largest consumer of jet fuel per-capita in the U.S.” Our small population makes that an interesting statistic, but Alaska accounts for just 3% of jet fuel consumption in the U.S., according to the EIA.

Alaska’s jet fuel consumption increased 7% in 2015, after the sharp decline that began in 2007. The more than 40% decline over the past decade was due to a decrease in the number of flights into and out of Alaska, as well as increased fuel efficiency of modern airplanes. This impacts Alaska in two ways – airplanes that stop in Alaska use less fuel, and some routes can now be flown without a stopover in Alaska. In Alaska’s favor, though, is that cargo is more valuable than fuel, so a stopover in Alaska to refuel allows carriers to save weight for cargo. In an article published in early 2015, airport officials estimated that carriers could transport 100,000 more pounds of cargo by refueling in Anchorage.

Cargo landings grew 6% in FY2015, according to the Alaska Department of Transportation’s activity reports for the Anchorage and Fairbanks airports, which would account for the growth in jet fuel consumption. FAA Data shows that landed weights of cargo in Anchorage grew by 8% in 2015. The Ted Stevens Anchorage International Airport was the second-busiest cargo hub, behind Memphis, in the U.S. At 17 trillion pounds of freight, Anchorage is not far behind Memphis’ 23 trillion pounds, and Memphis lost freight volume last year (these figures are for all-cargo aircraft; local and regional freight is also carried on passenger airlines in Alaska.)

Industry organizations had been cautiously optimistic about the continued growth of air cargo , but the recent U.S. Presidential election has cast some doubt on the potential impacts that more protectionist policies – not only in the U.S. but across the world – may have on global trade.

The air cargo industry is a positive economic driver in Alaska and may be more so in the current low oil price environment because lower fuel prices should not only increase profits for carriers, but lead to increased demand for cargo services. Alaskans have a stake in U.S. policies that could impact this important industry.

Alaska Employment Down 1.6 Percent in First Half of 2016

From the Alaska Department of Labor and Workforce Development

JUNEAU, Alaska—Detailed data released today for the first half of 2016 show that job loss in Alaska has spread to most sectors of the economy. Average monthly employment in the first six months of 2016 was down 5,530 jobs, or 1.6 percent, compared to the first half of 2015. Employment losses accelerated from a 1.2 percent decline in January to a 2.5 percent decline in June.

Employers paid $8.6 billion in wages during the first six months of 2016, down from $9.1 billion during the first half of 2015, a 4.5 percent decline when adjusted for inflation.

Private sector employment was down 4,867 jobs, or 1.9 percent, driven largely by losses in oil and construction. Oil and gas industry employment was down 2,384 jobs, which was an average monthly loss of 16.4 percent. Oil industry cutbacks escalated through the first half of the year, from 11.9 percent fewer jobs in January to 22.1 percent fewer in June.
 
Construction employment was down an average of 8.3 percent in the first half of the year, with steady losses each month. Specialty trade contractors and heavy and civil engineering construction were hit hardest, impacted by minimal capital budgets and cutbacks in oil-related construction projects.

Losses in the professional and business services sector, 1,536 jobs, were closely tied to oil and construction declines. Nearly half the losses were in architectural, engineering and technical consulting services. Managing offices and temporary help services also lost jobs.

Manufacturing employment, which is dominated by seafood processing in Alaska, was lower than 2015 levels by a small amount in early 2016 but May and June showed large over-the-year losses from weak salmon returns.

Wholesale and retail trade began recording losses in the first half of 2016, with a combined average monthly employment loss of 178 jobs. Losses accelerated from January, when both sectors were adding jobs, to June, where combined employment was down by 906 jobs. Trade establishments associated with construction and heavy machinery were generally down and so was sporting goods store employment, a result of store closures.

The transportation and warehousing sector showed growth in the first half of 2016, largely in air cargo transportation and tourism-related transportation. Other freight transportation was down slightly in response to the downturn in local consumption.

The information industry remained relatively flat from the first half of 2015 through the first half of 2016. Telecommunications, its largest component, did not add jobs in 2016. Gains in the motion picture industry offset small losses in print publications. The financial services industry — which includes financial institutions, insurance carriers and real estate and rental companies — lost 77 jobs, mostly in real estate.

Education and health services — which includes private education, social services and health care — was the only sector to gain a significant number of jobs, growing by 2.3 percent overall. Ambulatory health service employers, which have the most jobs in the sector, grew by 2.2 percent, or 400 jobs over the year. Private hospitals, the second largest health care employer, grew by 3.3 percent, or 370 jobs. Nursing and residential care facilities added 56 jobs, and social assistance added 246, for 2.6 percent growth. Private education, which makes up just 5 percent of the sector, was flat in the first half of 2016.

The leisure and hospitality industry, which depends on local as well as visitor expenditures, was relatively flat at 0.2 percent growth, or 69 additional jobs. Nearly two-thirds of jobs in this industry are in restaurants and bars, which were down slightly. Accommodations also lost a small number of jobs, which were offset by a 3.6 percent gain in the smaller arts, entertainment and recreation sector, at 164 jobs. Most of this growth was in fitness and recreational sports centers.

The remainder of private sector employers are categorized as other services, which lost jobs in the first half of 2016. Most of the loss in this group was in the personal and laundry services sector.

The public sector, which made up a fourth of payroll employment, was down 0.8 percent, or 663 jobs. The decline was driven by a 4.6 percent loss in state government, or 1,199 jobs. Local government employment was up 0.4 percent, or 183 jobs, almost all in school districts. Federal growth also offset some of the losses from state government. Federal civilian employment grew 2.4 percent, or 353 jobs, as federal employment continued to rebound from years of cuts.
 

View the original press release at http://labor.alaska.gov/news/2016/news16-42.pdf