by Rhonda McBride
Monday, December 28, 2009
ANCHORAGE, Alaska -- Alaska's economy definitely could be better, but economic experts say it's not as bad off as it could be.
As for next year, they expect a sluggish start but believe the economy will hold its own.
With many uncertainties about resource development in Alaska, it's a cloudy picture, but not without some bright spots.
The main advice for 2010: Proceed with caution, but avoid undue pessimism.
"We've been pretty stable here through the whirlwind of this recession," said Tim Bradner, an oil and gas writer for the Alaska Journal of Commerce.
While it is the winter of discontent for national and global economies, Alaska's economy has been somewhat insulated.
"Most economists, though, would agree that we're still in a lot better shape than other states. We're down about 1.3 percent in total jobs. Other states are down 6 percent, 8 percent, so I think we should count our blessings," Bradner said.
Among Alaska's blessings: A strong military presence with large installations, and thanks to high oil prices-- stable state revenues.
"Our financial reserves total $6- or $8- billion-- which make us the envy of other states like California that are just going broke. So I think we've got a lot going for us," Bradner said.
The Anchorage economy has had a lackluster performance this year, and while that will likely continue through the next, the man whose job it is to track the numbers for Anchorage says flat is good.
"We're seeing an interest in national firms, in a lot of different fields, not just retail. We're talking about a lot of different types of businesses that are showing interest in Anchorage," said Bill Popp, CEO of the Anchorage Economic Development Corp.
Popp says those companies are curious about why Anchorage seems to have avoided the brunt of the recession so far.
"So our hope is that we're going to start seeing a renewed level of new investment into the Anchorage economy in the next year and that to me would be very exciting. That would be a positive sign," Popp said.
One positive sign for Anchorage: A pick-up in air cargo traffic.
"We just had an all-time record refueling day at 3.2 million gallons on November the 18th in advance of Black Friday," Popp said.
While Anchorage's economy shows potential for gaining ground, Rural Alaska's economy continues to slide.
Many communities are struggling with two back-to-back winters of record energy prices. Many still pay more than $5 a gallon for fuel.
The Calista Native Corp., with shareholders in Western Alaska, says the outlook for the coming year is grim.
"Imagine, some of the Native corporations send larger dividends. We just sent elders $300," Calista CEO Matthew Nicolai said.
Nicolai says those dividends had a huge impact on the economy of small villages because the elders gave the money to their families to buy fuel for hunting and fishing.
One of the biggest clouds on the horizon for the entire state is the future of the Alaska natural gas line.
Next year will be critical. Two of the main competitors to build the line, TransCanada and Denali Pipeline, will conduct open seasons in hopes that producers will commit their gas.
"When these companies show up with their check books, whether they're willing to write the checks or what conditions they're willing to write the checks will tell us a lot about how they view the pipeline and how they view the Lower 48 market," Bradner said.
The open seasons will be a critical crossroads for the state's economy not just next year but for years to come.
Two other key oil and gas issues are on the economic radar screen for next year: The debate over state oil and gas taxes and the decline of oil going through the pipeline.
One of the problems facing Rural Alaska is that the Obama administration is still formulating its policies on Rural Alaska.
Denali Commission funding has declined from the Ted Stevens era and Native corporations could see their ability to tap the small business administration's 8(a) government contracting program cut back.
On the mining front, the Donlin Creek gold mine, a project that holds great promise for economic development in Western Alaska, could begin its permitting process next year.