*Renata Bennet has been a part of the TOTE Maritime Alaska family for more than 42 years. She is our resident expert on all things Alaska - especially the economy.
Alaska is a wealthy state with $65B in the Permanent Fund, $18B of which is in the earnings reserve account and available for spending. Alaska’s total population is 736,000, 78% live in the Railbelt: 401,000 or 55% in the Anchorage/Mat-Su area; 111,000 (15%) in Fairbanks/Interior and 58,000 (8%) on the Kenai Peninsula. In the last two years, Alaska’s population declined for the first time in a decade and out-migration exceeded in-migration for the past six years; totaling -7,577 in 2018. Alaska’s demographics are changing as young people are leaving the state for job opportunities in the Lower 48 and older people are staying. Demographers state this trend will continue for the next decade.
The outlook for the economy is good - as military and oil and gas spending will add billions of dollars to the state over the next decade. Tourism continues to grow, bringing more cruise ship passengers with total visitors forecasted at 2.3M for this year. However recent declines in oil price drove the state into a recession, employment for the first quarter of 2019 is showing a very slight (0.3%) growth for the first time in three years. Since the level of employment is at 2011 levels, full recovery is still many years away. Impacting the recovery is the current fiscal situation; Alaskans have spent beyond their means for many years and exhausted all savings funds with the exception of the Permanent Fund. The current governor was elected promising a $3,000 PFD to each Alaskan but in order to keep his commitment, he has proposed severe cuts to public services and no capital budget. The Senate and House are grappling with how to solve the crisis as the state has no taxes that would bring in new revenues. The public reacted negatively to Governor Dunleavy’s proposals and a recent public opinion poll shows 52% feel the economic outlook is “not good or pretty bad” and 64% feel the state is “on the wrong track”.
Recent very large oil discoveries on the North Slope are leading to new projects and exploration by major oil companies, among them: ConocoPhillips, Oil Search, Armstrong, ExxonMobil, BP, ENI, Hilcorp, Accumulate Energy, Elixir Petroleum, Pantheon and Brooks Range. Alaska is a mineral rich state with hundreds of deposits many of which are world class and include critical metals such as graphite, copper, and cobalt. Alaska’s Congressional delegation and the Trump Administration have been working on unblocking obstacles to development; currently, the U.S. depends on China and other foreign countries for critical minerals. Mining exploration in 2019 is forecast at $130M with 50% of this investment from Australian companies and 35% from Canadian. Alaska is well-regulated and resource extraction and oil and gas exploration have co-existed with fisheries and wildlife for over 70 years, yet the State faces endless pressure from outside environmental groups delaying and burdening development.
Alaska is United States primary defense location and military construction currently underway at Eielson AFB for the incoming F-35 squadrons, at Clear AFB for Long Range Discrimination Radar and at Fort Greely for missile defense silos will bring over $4.5B in federal monies to the state over the next 4 years.