Survivor’s guide to low oil prices here on the peninsula: For those of you who were here during the mid-1980s, you know the drill. For those who weren’t, let me tell you what’s getting ready to happen so that you can avoid financial ruin.
In around 1985, Ronald Reagan asked the Saudis to start pumping oil as fast as they could to bankrupt the Soviet Union, whose production costs are substantially higher than the Saudis. The Saudis obliged and it not only caused the dissolution of the Soviet Union but it also brought the US oil industry to its knees.
Real estate values in Anchorage and on the peninsula plummeted. In Anchorage, condos that had been selling for $75,000 were languishing on the market priced at $15,000. Single family homes took a huge hit, too, as did raw land.
There were quite a number of business failures as well as the failure of a local savings and loan, Peninsula Savings and Loan. For a time, many merchants wouldn’t take a check from any business that even had the word “Peninsula” in the business name because there was a likelihood that the check would bounce.
When we arrived in Alaska in in 1985, we paid $850 a month for a unit in a four-plex. Two years later, while down in California, I read in the Clarion that the entire four-plex was for sale and at the price they were asking, the entire monthly payment for the building would have only been a bit more than our rent was. We should have bought it and moved back up here then.
It looks like the Saudi strategy to cripple US shale oil production will take a couple of years — enough time to seriously harm Alaska’s oil industry, our state government and the state’s finances.
And most of us will be unaware of the pain and suffering to the Alaskan families who will lose their livelihood and who will have to move Outside. I was one of those who had to leave in 1986 and the day I drove out of Alaska was one of the darkest days of my life. The lead-up to that day was pure miserly. We loved it here and wanted to stay forever. I had already moved my family around about four times prior to our stay in Alaska and the move to California was the last straw for me and the kid’s mom. She couldn’t take any more moves and she took off. So remember, every time you hear of a lay-off or down-sizing, keep in mind that each one of those people is preparing to engage in a heart-wrenching battle of some kind in order to stay solvent and keep their family together. Please be sensitive to this and help these folks however you can.
For those who have homes, if you are considering a move Outside, you might want to accelerate your plans and get ahead of the curve. It will still be a while before the housing market starts getting really soft. And for those of you who have money to invest, there will be some terrific values in real estate here in a couple of years, provided that the Saudis stay on course with their plan. And for those young folks who are thinking about a career in the oilfield, you might want to wait for about four years when things start returning to normal again. There will be intense competition for the few oilfield jobs that will be coming open in the interim.
To those who experienced the mid-80s crash, what do you have to add? And do you take issue with anything I’ve said? Let’s start a discussion that could help these other folks cope with what lays ahead.