Job loss on Alaska’s horizon. According to a recently released forecast by the Alaska Department of Labor and Workforce Development. The report forecasts a loss of 2,500 jobs in Alaska in 2016. That would amount to a loss of 0.7 percent, after gaining 1,700 jobs in 2015. Tied to low oil prices, the oil and gas industries, the construction industry and state government will likely be hit hardest. Since 1987, the state has gained jobs in 27 out of 28 years. But with the straining economy, “dips in employment will be more common in the next 28 years than they were in the last,” according to the report. Headlamp would like to strongly caution that in this environment, enacting taxes on job creating industries like oil and construction will only exacerbate the job loss forecasted by the department of Labor and Workforce Development.
The New York Times covered reports that oil prices plunged again Wednesday by more than 5 percent as investors paid more attention to signs that global stockpiles are growing than to increasing instability in the Middle East and North Africa. The glut in oil, and natural gas, has sent the oil industry into its worst tailspin since the 1990s. Forty U.S. and Canadian oil companies filed for bankruptcy protection in the last year or so, and several new industry reports have predicted unrelenting pain in 2016. Headlamp hopes that in such a precarious economic climate, Alaskan lawmakers do not pursue policies that will further hurt Alaska’s chief industry.
ImPORTant for Alaska. Anchorage Mayor Ethan Berkowitz said Thursday he has one main request of the state Legislature this session – adding $290 million for the city’s unfinished Port of Anchorage modernization project to a statewide bond package. In a presentation to a bipartisan group of legislators from the Anchorage area, Berkowitz said that in the state’s fiscal climate, he’s making the port the city’s sole priority in the upcoming legislative session in Juneau. The port was also a top priority of former Mayor Dan Sullivan’s administration. Efforts to revamp the aging hub have been underway since 2003, but the expansion has been troubled, with two lawsuits over the design, construction and management of the project. The proposed legislative requests will need approval from the Assembly, and the administration’s program is set to be introduced at Tuesday’s meeting. Headlamp applauds Mayor Berkowitz’s plan for a port modernization project. If Alaska wants to compete domestically and internationally, we need the infrastructure to do so.
Ready to move forward together. The assembly approved a settlement Thursday between the Fairbanks borough and its biggest taxpayer, the owners of the trans-Alaska oil pipeline. The agreement puts the pipeline’s tax value at $8 billion through 2020, and all pending litigation gets dismissed. “I don’t believe that this represents the true value, but I do think that this is the best step at this time,” said Kathryn Dodge, deputy presiding officer of the Fairbanks North Star Borough Assembly.
“Not that attractive.” According to Reuters coverage, Oil traders in Asia are running the numbers on importing Alaskan crude, after the end of a four-decade ban on U.S. exports also eliminated a costly tanker requirement for shipping North Slope oil overseas. Last month Congress rolled back the export ban, and with it the tanker restriction. This theoretically allows buyers to cut $2 to $3 a barrel off their shipping costs to Asia by booking sales on cheaper foreign-flagged tankers, traders say. For now, traders say the numbers still don’t quite add up, and no fixtures have been booked in recent weeks. U.S. domestic crude prices have been rising relative to global benchmark Brent, while Middle East marker Dubai has weakened. And much of Alaska’s production is effectively tied up with long-term charters on U.S. vessels that cannot be easily redeployed. “The opportunity is more open than before, but the economics are not that attractive just now,” a trader with an Asian refiner said. As Headlamp has repeatedly said, Alaskan policymakers need to remember the potential capacity Alaska exports can have on the global stage. As the report indicates, Asian markets are almost ready to commit to potentially major energy deals with Alaska, hopefully future policy does not dissuade this interest.
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Port of Anchorage main focus of Berkowitz’s legislative program
Alaska Dispatch News, Devin Kelly, January 7, 2016
Fairbanks Borough Assembly OKs trans-Alaska oil pipeline settlement
Fairbanks Daily News Miner, Amanda Bohman, January 6, 2016
Low oil prices will likely translate to Alaska’s first annual job loss since 2009
Alaska Dispatch News, Annie Zax, January 6, 2016
Traders eye Alaskan oil exports to Asia as shipping ban ended
Reuters, Jacob Gronholt-Pedersen and Liz Hampton, January 6, 2016
Oil prices decline more than 5 percent as stockpiles increase
New York Times, Clifford Krauss, January 6, 2016