Alaskanomics

Resource Development Council Hosts Annual Conference

Earlier this month, the Resource Development Council (RDC) hosted its 37^th Annual Resources Conference. It’s the time of year when the resources industries come together to celebrate the accomplishments of the past year and look ahead to the coming year. Conference organizers took a new approach to the sessions with panel discussions and it was a great change. Instead of hearing from each presenter individually, the moderator led a facilitated discussion and asked questions relevant to each specific area. This provided a well-rounded discussion on current events and a look to 2017 and beyond.

This year’s presentations provided a cautiously optimistic look towards the future of resource development in Alaska. Recent years have been tough for oil and gas, mining, and forestry. Fishing and tourism have had good years, but also see a lot of regulation and federal overreach.  This year, speakers noted that with the shift in federal administration, there could be some hope for a change federal overreach and regulations that have crippled the industry in recent years. There are still a lot of unknowns, but most are hopeful for a favorable adjustment to way the State of Alaska and the Federal Government interact.

The area where the optimism faded was when the state’s fiscal situation was discussed. For many, the lack of a sustainable budget plan causes angst and uncertainty. This topic has been a headliner at the conference for the past couple of years and while attendees hoped that things would be better next year, they were realistic to the fact that difficult decisions were needed to maintain any sort of sustainable budget. Many stated that while they were hopeful for a solution, they knew that hope was not a good strategy and real work must be done to move the state forward. Numerous legislators were in the audience throughout the conference and speakers reminded them of their responsibility to make difficult decisions to maintain a functioning state government.

The team at RDC always puts on a great conference, with detailed information on the happenings throughout resource development, networking opportunities and a chance to plan for the future of Alaska. Presentations and videos of each session are saved at RDC’s website.

January 2016 Unemployment at 6.6 percent

The State of Alaska, Department of Labor and Workforce Development released its monthly unemployment numbers on Friday. Alaska’s seasonally adjusted unemployment remained at 6.6 percent to kick off the New Year. The rate continues to be above the national average as the national economy grows.

Most boroughs and census areas had an increase over the last month and over half increased by more than a percentage point. This is very common for January numbers in Alaska. The largest increase came from Prince of Wales-Hyder Census Area, where the rate increased by 3.9 percent. The highest unemployment continues to be in the Kusilvak Census Area at 23.9 percent. The Aleutians East Borough and Aleutians West Census Area had the lowest rates at 3.2 and 2.8 percent, respectively. The low rates are due to the January start to the ground fish fishing season.

The Department of Labor has posted its revised employment and unemployment data for 2015 and it is now available at http://laborstats.alaska.gov/

Resource Development Council Conference Wrap-up

The Resource Development Council hosted its 36th Annual Alaska Resources Conference on November 18 and 19 in Anchorage. Each year, members of the resources industry gather to discuss the past year’s accomplishments as well as look to the future of tourism, fisheries, oil and gas, mining and forestry.

Governor Walker opened the conference with a few words about his desire to make sure that there is more oil in the pipeline for all Alaskans. He was encouraged about the exciting time in the mining industry and the good steps being taken in the AKLNG project. The Governor also noted that he would be soon releasing his plan for a more sustainable budget and it would be without sacrificing Alaska. He assured attendees that he would not shy away from the tough decisions that are part of his job description. He also noted that he would stay strong in his message to Washington DC and that Alaskans need more access the natural resources in our state.

The conference continued with the updates from the industry, including an overall update from State of Alaska economist, Neal Fried. Presenters shared a lot of what attendees already knew and gave a sense that while there are struggles with the resource development industry, that there are also things to be excited about and there are opportunities available.

News from the oil and gas industry was understandably less optimistic as it has been in past years. Presenters from ConocoPhillips and BP discussed the work being done to progress the AKLNG project. Both companies want to continue the momentum that was gained during the special legislative session. All parties must be aligned to assure success for the project.

The Arctic, Federal overreach, Pebble Mine and Point Thomson rounded out the day’s discussions. Due to the United States’ Chairmanship in the Arctic Council for the next two years, the world is focused on Alaska. Many different interests throughout the state and the rest of the US are competing for the attention of the Arctic Council and the world.

Day two of the conference started with a session titled, “Real Solutions to Alaska’s Budget Crisis”. It included a presentation about the necessity to look at state spending and how it relates to a sustainable budget. Everyone agreed that there were no easy answers when it comes to the State budget. Spending and new revenue will need to be part of the equation and the speakers agreed that something would have to be done sooner, rather than later. Today’s budget crisis is much different than the last one the state faced. A concern is the fact that we are depleting budget reserves without anything to refill those reserves on the horizon. Using the earnings from the Permanent Fund while keeping the dividend, buys time to work on a more sustainable solution. Not doing anything in 2016 damages the ability to come out of this crisis in the future. Speaker Mike Navarre, Mayor of the Kenai Peninsula Borough, noted, “There is no perfect plan and we cannot be crippled while waiting for the perfect plan”.

The day continued with discussions about oil tax credits, the progress being made in Cook Inlet, mining and a wrap-up on work on the AKLNG project. The increased production in Cook Inlet has allowed Southcentral Alaska to have a needed gas supply. It was also stated that discovered but not-developed fields could bridge the gap until the AKLNG project comes online in the mid-2020s (if approved).

AKLNG is moving forward and the project received the right to export to both free and non-free trade countries. The Alaska Oil and Gas Conservation Commission (AOGCC) has supported gas offtake and carbon dioxide reinjection. Both of these are good steps in moving forward to a successful project. While there are many more steps to take and hurdles to overcome, the many are hopeful that the project will proceed and be a success. At the end of the day, we all need to do what needs to be done to ensure a successful project to serve Alaskans for many years to come.

For complete conference information and presentations, visit http://www.akrdc.org/november-conference

Alaska September Unemployment at 6.4 Percent

The Alaska Department of Labor and Workforce Development released its September unemployment numbers on Friday. The seasonally adjusted rate for September has dropped slightly from August and is 6.4 percent. The non-seasonally adjusted rate began to climb as summer tourism and fishing winds down for the year. The non-adjusted rate in September was 5.7 percent. 

Most boroughs and census areas had increases in the unemployment rate as summer activity slowed for the year. 21 of 29 boroughs and census areas had an increase. Bristol Bay Borough and the Dillingham Census Area has the highest increases in the state. The highest unemployment rate continues to be in the Kusilvak Census Area, which is currently 19.5 percent. The lowest is in the Aleutians West Census Area, holding at 2.9 percent. 

The Alaska unemployment rate has not shown a noticeable trend during 2015, even while the National average has shown steady decline in the past few years. The challenges being faced by the State of Alaska have yet to be felt in the unemployment rates. The unemployment numbers will continue to be monitored closely as the economy shifts into the winter months and potential turmoil.  

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

Alaska Unemployment Rate at 6.6 percent during August

The State of Alaska Department of Labor and Workforce Development released its monthly employment numbers last week. Alaska is holding relatively flat with a seasonally adjusted rate of 6.6 percent, which is just below the three-year average of 6.8 percent. Alaska is still above the national average, which was 5.1 percent in August, and continues to drop back to pre-recession levels.

The unadjusted unemployment rate in August was 5.5 percent. August typically has the highest economic activity of the year throughout most of the state. Rates fell in all but three boroughs and census areas. The only three areas to see an increase in August were in the Bristol Bay region. July is the peak for salmon fishing in the region, which is the reason for the increase.

The Southwest Region and Northern Region both have higher than average unemployment rates. Neither area sees a significant increase with tourism and other than the fishing areas of Bristol Bay, the other areas in the Southwest Region have significantly higher rates than the rest of the state. The other regions of the state are much closer to the average unemployment figures.

For more detailed statistics visit, http://live.laborstats.alaska.gov/

Alaska Unemployment at 6.8 percent in June

In the past two years, the unemployment rate has been relatively stable and remained close to the 10-year average. June’s rate increased one-tenth of a percent from the revised May number. Nationally, unemployment is at 5.3 percent, down from 5.5 percent in May.

During June, the more urban areas in Alaska saw increases in not-seasonally adjusted rates because their economies are typically less seasonal and do not rely on tourism and/or fishing seasons. Bristol Bay Borough and Denali Borough have the lowest rates with 3.7 and 4.3 percent, respectively. Bristol Bay’s economy is dominated by the seafood industry and Denali relies on tourism in the summer months. The highest rate of unemployment continues to be the Kusilvak Census area at 25.7 percent. This area was recently renamed from Wade Hampton Census Area.

For full employment information and statistics, visit http://live.laborstats.alaska.gov/

Alaska Unemployment at 6.8 percent in May

The State of Alaska, Department of Labor and Workforce Development released its unemployment numbers for May. The seasonally adjusted unemployment rate remained relatively unchanged at 6.8 percent. This is only one-tenth of a percent higher than it was in April. It is still above the national average, which was 5.5 percent in May. In comparison, the non-seasonally adjusted rates fell four-tenths of a percent. This is common with the increase in summer tourism throughout the state.

Most boroughs and census areas had a decrease in the unadjusted rates for April. Denali Borough had the biggest drop going from 17 percent to 5.1 percent. Summer tourism is responsible for much of the increased employment in Alaska. The areas that had an increase in unemployment were the North Slope Borough, Kodiak Island Borough, Aleutians East Borough and Aleutians West Census Area. The North Slope is typically stable throughout the year, but had an unusual winter construction season. The other three are usually different than the rest of the state because of the increase in employment during the winter fishing season.  

Detailed employment statistics can be read at http://live.laborstats.alaska.gov/ces/index.cfm

Unemployment in March at 6.5 Percent

The Department of Labor and Workforce Development released the March unemployment rate early this morning. The rate for March was up slightly from February and stands at 6.5 percent. The national average remained steady at 5.5 percent.

The not -seasonally adjusted lowest and highest rates in the state remained the same with the Aleutians East Borough and Aleutians West Census Area being the lowest at 3.2 and 2.6 percent respectively; and Wade Hampton Census Area the highest at 26.6 percent.

As part of their monthly press release, the Department highlighted the job numbers of the different regions throughout Alaska for the 1^st quarter of 2015.

• Anchorage’s retail trade was the biggest source of new jobs, while professional and business services had the largest losses. The lack of snow cut into winter recreation, which created weakness in the leisure and hospitality industry.
• Southeast jobs were lower than the same period last year due to the less-than-usual growth in construction and seafood processing.
• Southwest was also lower than last year even with the seasonal growth from winter fishing.
• The Gulf Coast saw gains in seafood processing, mining, and leisure and hospitality that balanced out the loss in health care and government jobs.
• The Interior, including Fairbanks, had a small loss in jobs, but health care in the region is growing.
• The Northern Region had an increase in jobs from the same period last year. Health care increased, as did local government.

For full employment statistics, visit www.laborstats.alaska.gov

Unemployment Steady in Alaska for January 2015

The State of Alaska Department of Labor and Workforce Development released its January unemployment numbers on Friday. The seasonally adjusted unemployment rate for January was 6.3 percent, virtually unchanged from December’s 6.4 percent. Alaska continues to be above the national average, which was 5.7 percent in January.

24 of 29 boroughs and census areas in Alaska had an increase in the not-seasonally adjusted rate. The areas that decreased include the Aleutians East and Kodiak Island boroughs and the Aleutians West and Dillingham Census Areas. These areas typically show a decrease this time of year due to the onset of the Pollock season and other winter fishing. The Municipality of Skagway was the other area to have a decrease, but on by .1 percent from the previous month. Skagway has the second highest level of unemployment behind the Wade Hampton Census Area.

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

Resource Development Council Conference Part 1

The Resource Development Council hosted the 35^th Annual Alaska Resource Conference this week. Over the next week, Alaskanomics will highlight the presentations from the conference.

The two-day event allows the resource industry to gather and look back at the past year, while planning for the coming year. There were many things to celebrate at this year’s conference, but participants and speakers were decidedly cautious about the State’s fiscal future.

As is the tradition, the conference started out with an outlook for the coming year by Alaska Department of Labor Economist, Neal Fried. With the exception of 2009, the Alaska economy has been growing for the past 25 years. The growth has not always been by leaps and bounds, but it has been moving in the right direction. In 2014, it is predicted that there will only be about 900 new jobs in Alaska, which is only 0.6 percent. This is not as strong as many would hope and there will be a breakdown of the employment categories in January when the annual wrap up is published. Fried continued with brief updates of the various resource industries.

• Timber has had very little change and is down with record lows
• Mining is largely unchanged as well and has slowed and growth has flattened out
• Fishing grew in both processing and harvesting this past year
• Oil keeps hitting new highs, North Slope employment has doubled in the past decade
• The Visitor Industry is up for the third year in a row

Alaska earnings have grown since a dip in the late 1990s and we currently have the second highest household income behind Maryland. The population grew in the past year, but the growth is starting to slow down.

Kara Moriarty of the Alaska Oil and Gas Association gave the update for the oil and gas industry. She shared the usual numbers that more than one third of all Alaska jobs are tied to the oil and gas industry and for every one industry job, 20 other jobs are generated through industry spending. The oil industry paid $6.9 billion in taxes and royalties and luckily the current tax policy generates more revenue at low prices than the old regime. This is very good since the price of oil has dipped below $80 a barrel. There has been a lot of new development on the North Slope and in Cook Inlet. Moriarty finished with the reminder that while we cannot control the price of oil or Alaska’s high cost environment, we could all be “Resource Proud”.

Stephanie Madsen of the At-Sea Processors Association shared that the fishing industry continues to grow and is currently the number one private sector employer in the state. The value of Alaska’s fisheries fluctuates because of the global market. The industry continues to be challenged by environmental non-governmental organizations (NGOs) calling for protected areas. Madsen continued by noting that Alaskan fisheries historically have been managed conservatively and are continually adapting to the varying definitions of sustainable.

Keith Coulter with Koncor Forest Projects gave the update for the timber industry, which by far has seen the largest decline of other resource industries. He noted that both fishing and forestry are sustainable and renewable and are not mutually exclusive. Rural communities that have lost timber are having a hard time replacing the jobs and income that were seen with the timber industry. Coulter shared that he felt that Federal Forests should be managed in the same way that private forests are and Alaska should resist efforts to adopt federal forest practices. He warned that changes to the Alaska forest practice should be informed by contemporary science. Coulter also urged the need for reform of federal overreach in the Tongass and elsewhere through fewer environmental regulations and restrictions.

Karen Matthias with the Council of Alaska Producers gave the update for the mining industry. She was proud to share that both Red Dog and Greens Creek Mines were celebrating their 25^th anniversary of operation. She said the industry needed to do a better job at sharing success stories from around the state. An example is that Usibelli Mine has been in operation for more than 70 years and is mining responsibly. There are more than 5000 direct mining jobs in Alaska with an average annual wage of $100,000. Donlin Gold is in the permitting process and other mines could bring many new jobs to the state. Alaska is number one in the world for pure mineral potential and holds incredible potential in the mining industry. It was no surprise to conference attendees that permitting is consistently the biggest challenge in mining and is a very slow process. The outlook is bleak right now, but the industry can redouble efforts to fight against those trying to block responsible development and educate the public on the positive impact of mining so that things might improve.

Gideon Garcia with CIRI Alaska Tourism wrapped up the year in review with the tourism industry update. This past year, Alaska saw 1.96 million visitors, who spent $3.9 billion. The tourism industry adds 46,000 jobs for Alaskans. The projections for the 2015 season look good. Cruise traffic is predicted to have a 2.8 percent increase and overall visitor traffic is expected to jump 2-3 percent in 2015.

The year in review and 2015 outlook is a staple to the RDC conference and while presenters were proud to share accomplishments within their individual industries, it was obvious that the challenges of federal overreach, commodity prices, and regulations weighed heavy in the room.

Alaskanomics will continue to highlight the conference with Investment in Action by Trond-Erik Johansen of ConocoPhillips Alaska and Investing in Alaska’s Future with Janet Weiss of BP Exploration (Alaska).