The price of oil is hovering around $50 a barrel. That may be good news when you pull up to the gas pump, but it’s challenging news for some elements of our economy. In the face of dwindling oil revenue, Alaska, for instance, is facing a $3.5 billion budget deficit. The state capital budget will see cuts, and several major projects have been put on hold.
Oil has been Alaska’s economic engine for decades. In the face of bad news and storm clouds in the distance, it would be easy to focus on the negative.
During my 28 years in the state, Alaska has experienced a number of economic highs and lows. But I’ve seen the Alaskan can-do attitude in the face of adversity again and again. In a place where nature is unforgiving and supplies might take weeks or longer to be delivered, Alaska’s people have adapted in resourceful and innovative ways. For example, if you’ve caught the fat tire bike craze, you have an Alaskan to thank.
In 2014, I had the privilege of serving as the Anchorage Economic Development Corporation’s board chair. In that role, I was able to interact with nationally-known economic thought-leaders, and work with some of the brightest CEOs in Anchorage and throughout Alaska. What I saw gives me confidence that Alaska can weather our approaching financial storm.
Here are my top five reasons for that optimism:
- The Arctic: Global warming is opening sea routes to previously inaccessible areas. The viability of arctic shipping routes is still open to debate, but change presents opportunities. Additionally, we are excited to be leading a key long-term scientific study of the Arctic marine ecosystem along the Beaufort Sea from Barrow, Alaska, to the Mackenzie River delta in Canada. The Marine Arctic Ecosystem Study (MARES) stems from increased attention to climate change, energy development, and sustainability in the Arctic region. Information gained will aid government, industry, and communities in making decisions related to regulations, resource management, economic development, and environmental protection issues. In 2015, the United States begins a two-year term as chair of the Arctic Council, an intergovernmental forum of arctic states and stakeholders.
- Alaska’s Location: Ted Stevens Anchorage International Airport (ANC) is just 9 hours from 90 percent of the world’s population and is one of the world’s busiest cargo airports. It also holds a unique position among international air gateways in the US: The US Department of Transportation permits air carriers from foreign countries to conduct expanded cargo activities at ANC, like transferring cargo to other foreign or US carriers, without being considered to have broken its international journey. ANC and Fairbanks International Airport are the only two airports in the United States to have been granted these liberal air cargo transfer capabilities.
- Federal Government Presence: The U.S. government is the largest landowner in Alaska, controlling about 60 percent of the state – an incredible 222 million acres! The land stewardship is divided among several agencies, including the National Park Service, the Fish and Wildlife Service, the Forest Service, the Bureau of Land Management, the National Petroleum Preserve and the military. A slowing oil economy can be offset by additional activity on federal lands.
- Alaska’s Mystique: Quite honestly, Alaska is a land of dreams for many. For those who call the 49th state home, the sight of soaring snow-covered mountains and nearly endless summer daylight are part of our daily lives. For others, they are motivating factors for visiting. And Alaska’s visitor industry is stronger than ever. For the most recent 12-month period with complete statistics, Alaska had a record nearly 2 million visitors, whether by air, cruise ship, or highway/ferry. Low fuel costs should help drive additional growth in the tourism industry.
- Natural Resources: Ultimately, oil prices will climb. How high, and when? Nobody knows. But Alaska has other commodities, too. According to the World Trade Center Alaska, our state contains 6 percent of the world’s known resources of copper, 3 percent of both the known gold and zinc deposits, and 2 percent of the lead and silver. In 2013, over one million ounces of gold were produced in the state. Alaska is resource rich!
It’s the start of a new year, and we will all face a variety of challenges. Attacking those challenges with a positive attitude is the first step toward success. Alaska is known as “the Great Land,” and it will certainly continue to be that in 2015 and beyond.
Tim Vig, PE, is a senior principal based in Anchorage, Alaska.