Alaskanomics

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).

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.

Alaska's May Unemployment at 6.4 percent

Alaska’s Department of Labor released its monthly unemployment rate this morning. In Alaska, the seasonally adjusted rate for May was 6.4 percent. Both the Alaska rate and the national average were unchanged from April to May. In the past 19 months, the adjusted rate in Alaska has only fluctuated three-tenths of a percent.

For many areas of the state, the change between April and May were minimal. The exceptions came in areas with high levels of seasonal activity. This includes areas with active tourism industries and summer fishing runs. The Municipality of Skagway, Denali Borough, and Hoonah-Angoon Census area rates fell by 9.6, 10.1, and 9.4 percent, respectively.

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

The Department of Labor and Workforce Development is looking closely at the needs of the oil and gas industry. The industry currently employs more than 20,000 workers and estimates show that another 7,500 will be needed by 2020. The department recently released the Alaska Oil and Gas Workforce Development Plan 2014-2018. We invite you to read the plan at http://labor.state.ak.us/oilandgasplan/AOGWDP-single-pages.pdf

 

April Unemployment at 6.4 percent in Alaska

The State of Alaska’s Department of Labor and Workforce Development published the April unemployment rate this morning. For the first time in nearly five and a half years, the US national average is below the Alaska rate. The seasonally adjusted rate in Alaska was 6.4 percent during April. The not-seasonally adjusted rate was at 6.5 percent, which is eight-tenths of a percentage lower than March. It is very common to see large drops in April.

The fact that Alaska now has a higher unemployment rate than the national average is nothing out of the ordinary. Alaska’s rate was higher than the national average from 1983 until 2008. The national average had much more significant changes due to the recent recession than was seen in Alaska. The difference in the two rates is now in a pre-recession pattern and is expected to stay that way for the foreseeable future.

The summer tourist season is beginning to ramp up, which is in turn bringing declines in the rates throughout Alaska, especially in Southeast. Skagway had a rate of 21.6 percent in March and dropped to 13.1 percent in April. This was the most significant change throughout the state.

 Detailed employment estimates can be found at http://live.laborstats.alaska.gov/ces/

April Unemployment at 6.4 percent in Alaska

The State of Alaska’s Department of Labor and Workforce Development published the April unemployment rate this morning. For the first time in nearly five and a half years, the US national average is below the Alaska rate. The seasonally adjusted rate in Alaska was 6.4 percent during April. The not-seasonally adjusted rate was at 6.5 percent, which is eight-tenths of a percentage lower than March. It is very common to see large drops in April.

The fact that Alaska now has a higher unemployment rate than the national average is nothing out of the ordinary. Alaska’s rate was higher than the national average from 1983 until 2008. The national average had much more significant changes due to the recent recession than was seen in Alaska. The difference in the two rates is now in a pre-recession pattern and is expected to stay that way for the foreseeable future.

The summer tourist season is beginning to ramp up, which is in turn bringing declines in the rates throughout Alaska, especially in Southeast. Skagway had a rate of 21.6 percent in March and dropped to 13.1 percent in April. This was the most significant change throughout the state.

 Detailed employment estimates can be found at http://live.laborstats.alaska.gov/ces/

Resource Development Council Conference Day 1

The Resource Development Council recently hosted its 34^th Annual Alaska Resources conference. Attendees were treated to two full days of speakers and the chance to network with friends and colleagues. Neal Fried, Economist with the Department of Labor, started off the morning with a review of the past few years before speaking to the trends that he expects to see in 2014. Five years after the recession, Alaska is third in the nation for job gains; behind only North Dakota and Texas. Since late 2008, Alaska’s unemployment rate has been below the national average. Fried continued by outlining highs and lows in each of the industry areas. Employment in Alaska’s timber industry has been at a low level since 2009 and is looking for growth.  Going the other direction, mining has more than doubled since 2002. Fishing has seen nice growth in both processing and harvesting. Even with the decline in oil production, there has been steady growth in jobs since 2004. In the past decade, Alaska has seen a 12% increase in all employment.

The morning session continued with an industry update from oil and gas, fisheries, forestry, mining and tourism. Each presenter gave an outlook on what had happened in 2013 and what was on tap for the coming year. Kara Moriarty with the Alaska Oil and Gas Association noted that Cook Inlet was making a comeback and had grown by 38% from 2012 to 2013. The next step is to bring offshore production online and to realize the full potential of offshore drilling for Alaska and the nation’s economy. Moriarty concluded her portion by outlining the issue facing voters in the August 2014 primary election. The oil tax referendum is a threat to Alaska’s economy. She asked attendees to stand united against the referendum and not only vote ‘No’ on 1, but educate others as to the harmful nature of returning Alaska to a failed tax system.

Greg Baker, CEO of Westward Fishing Company gave his update on the fishing industry in Alaska. The management of fisheries in Alaska is a world recognized model of sustainability. 60% of America’s commercial seafood is harvested off Alaska. The fishing industry has been strong in the recent past and will continue because of the work done to sustain the resource, while still being profitable.

Shelly Wright, Executive Director of the Southeast Conference, shed light on the forestry industry. While timber has not been strong in the recent years, the total harvest hasn’t dropped from year to year. A challenge to the timber industry is that the federal government owns nearly 95% of the forest land, 80% of that is the Tongass National Forest.

Karen Matthias, Executive Director of the Council of Alaska Producers, discussed the status of mining in Alaska. While the controversy with the Pebble Project gets much of the attention regarding mining in Alaska, Matthias highlighted the 6 producing mines throughout the state. Red Dog, Fort Knox, Usibelli, Pogo, Kensington and Greens Creek are all currently in production stages and contribute to the 4,800 direct mining jobs in Alaska. There are 8 projects that are currently in advanced exploration stages and look to increase mining employment if they are able to move forward. There are many challenges to the mining industry including the uncertain investment climate, the overreach of the federal government in permitting and public perception. Each of these areas makes it difficult for producers to move forward with mines that are still in exploration phases.

Ralph Samuels of Holland America Line rounded out the group with an update on the tourism industry. He stated that 2013 was a good year for tourism and 2014 was looking to be another good year. Tourism not only brings visitors to the state, but it also promotes local products in hopes that travelers will share their experiences and products with family and friends. An exciting project that is in the works is the South Denali Visitor Center. This project is located at mile 135 of the Parks Highway and will be another stopping point for visitors and residents to enjoy interior Alaska. Phase 1 of the project should be completed by fall 2014 and will include construction of an access road, six miles of interpretive trails, and a campground. Phase 2 will include a push to Curry Ridge and will build a visitor center.

Each industry representative shared recent successes and challenges and were hopeful for the coming year. Throughout the conference, speakers encouraged attendees to take an active role in resource development outreach. As the ranking members of the committee, Senator Lisa Murkowski (R-AK) and Senator Ron Wyden (D-OR) discussed the work being done in the Senate Energy and Natural Resources committee. Both shared a mutual admiration for the bipartisan work being done to strengthen the nation’s resource industry and promised that the work would continue.

For the full presentations from each of the first day’s speakers, please visit http://www.akrdc.org/membership/events/conference/2013/presentations/

Cook Inlet Salmon Management

The Anchorage Chamber of Commerce hosted a lively panel discussion today about the issues facing Cook Inlet Salmon and the groups that are fishing the waters in the area. Hannah Harrison, an environmental and development consultant, moderated the discussion between Ricky Gease of the Kenai Sports Fishing Association; Rod Arno, with the Alaska Outdoor Council; Paul Dale of the Alaska Salmon Alliance; and Dwight Kramer, a Cook Inlet Task Force public stakeholder representative. The panelists were asked a series of questions in regards to Cook Inlet Salmon Management and each gave his take on the situation, from a different perspective.

The discussion that resulted from a series of four questions illustrated the fact that there are many concerns surrounding Cook Inlet fishing. Everyone agreed that over the past 10 years there has been a decrease in the annual salmon harvest and the issues facing the industry have become more complex in the past decade. Cook Inlet is the heart and soul of the sport fishing industry in Alaska and there are more than 450,000 people living within the Cook Inlet region. There was also a general consensus that the conflict regarding Cook Inlet salmon has had a negative effect on the Kenai Peninsula. The communities of the peninsula are very different, and most on the panel believed that a solution was possible if the communities and user groups were able to weigh in with their concerns and ideas.

Sport, commercial, personal and subsistence fishermen all have opinions on how the Cook Inlet fisheries should be handled. Over 50% of sport fishing in Alaska occurs in upper Cook Inlet. While over half of the State’s population lives in the area, it is not an area open to subsistence fishing. One only needs to visit the Kenai river in July to understand how popular the area is for tourists and locals, alike. The Fred Meyer in Soldotna is the highest grossing Fred Meyer in the nation during the month of July. It will be important for the industry to find solutions to the problems that are currently plaguing the area. Dwight Kramer noted throughout the discussion that the way to find solutions was through scientific research. He believed that if we were able to breakdown the research by watershed, it would be possible to identify future issues and help find solutions for current problems.

The discussion moved into the “aging of the fleet” and the fact that many in the industry are getting older and the cost of entry for younger fishermen is very high. Ricky Gease assured the audience that his association worked very closely with the younger generations of fishermen, from all sides of the industry and that the youth are being raised to be good stewards of Cook Inlet resources. It was also noted that the younger generations are very interested in solving the problems in Cook Inlet to help extend longevity along the watershed.

The panel wrapped up with a question about the state of Cook Inlet salmon in 25 years. Most believed that there was a place for sport, commercial, personal, and subsistence fishing throughout Cook Inlet. It will take hard work but there are many groups and individuals that are willing to make sure that Cook Inlet is available for multiple user groups to fish for many years to come. 

Unemployment Rate at 6.5 percent in August

The State of Alaska Department of Labor and Workforce Development release its latest unemployment numbers on Friday. While Alaska is still well under that national rate of 7.3 percent, the seasonally adjusted rate in August was 6.5 percent, which was up two-tenths of a percent from July.

The Department of Labor notes that Alaska’s rate declined significantly in the first half of 2013, but has been slowly creeping back to early 2013 levels. The increase in August is not large enough to suggest a change in the 2013 overall trend.

Bristol Bay and Skagway continue to have the lowest unemployment rates in the State at 1.9 percent and 2.5 percent, respectively. The rates were up slightly from July, which is typically the peak of fishing and tourism in those areas.

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

July Unemployment Rate at 6.3% in Alaska

The Alaska Department of Labor released the July unemployment numbers today. Alaska’s seasonally adjusted rate was 6.3% in July, up three-tenths of a percent from June’s revised rate. Alaska is still well below the national average of 7.4%. The not-seasonally adjusted rate was 5.9%, which is down six-tenths of a percent from June. Declines are typical between June and July due to summer employment in the tourism and fishing industries.

Bristol Bay Borough and the Municipality of Skagway have the lowest unemployment rates in the state at 1.1% and 2.3% respectively. Both areas depend heavily on a single summer industry. In Bristol Bay it’s salmon fishing and in Skagway it’s tourism. Summer Pollock and salmon fisheries are in full swing by July in the Aleutians, which is the reason for the drop in unemployment during the summer months.

Both the national rate and Alaska’s rate dropped eight-tenths of a percent from where they were one year ago.  

Alaska’s unemployment rate remains unchanged in May and is lower than the national average

The Department of Labor and Workforce Development released its monthly unemployment numbers on Friday and Alaska’s seasonally adjusted unemployment rate remains unchanged from April's number at 5.9%. This is well below the national average of 7.6% during May.

Summer economic activity began to pick up during May due to seasonal increases in the tourism industry.  Unemployment rates fell in 21 of 29 boroughs and census areas. The biggest declines were in Skagway and the Denali Borough, where tourism is strong during the summer months. The rates fell by 11.7 and 9.7 percentage points respectively. Skagway’s rate was 2.7%, which is the lowest in the state.

The largest rate increases were seen in the Aleutians East Borough and the Aleutians West Census Area. May is sandwiched between winter and late-summer western fisheries, and typically a slow month for the Aleutian chain.

The unemployment rate in the Anchorage/Mat-Su Region was 5.1%, which was .2% lower than April and .9% lower than May 2012.