The decrease in Alaska’s population last year was small, relatively speaking. The net decline of 61 residents from July 2013 to July 2014 amounts to statistical noise, a hundredth of a percent of the state’s population. What makes the tiny drop meaningful is that it spells the end of more than a quarter century of uninterrupted growth. That’s something to which the state and its people should pay attention.
The reasons for the net loss of a few dozen Alaskans are relatively easy to pinpoint. Since the late 1980s, Alaska’s oil production on the North Slope has been declining. The trans-Alaska oil pipeline now transports a fraction of the crude that flowed through it during the state’s oil boom. While oil-related job counts have stayed relatively high, cracks have started to show in the state’s dominant industry over the course of the past year as refiners and producers have announced significant workforce cuts. The impact of the Alaska oil industry’s gradual decline has been compounded by the precipitous drop in oil prices in late 2014 and early 2015, leading to a massive budget deficit for the state and cuts to public sector jobs and spending.
At the same time, the U.S. economy has recovered substantially from the recession of the late 2000s, to the point that the national unemployment rate dipped below Alaska’s in early 2014 and has remained there since. People follow jobs, and the shale oil boom in the Lower 48 over the past several years siphoned not only much of oil and gas producers’ attention but also quite a few oilfield services employees and those in related trades.
The Interior also mirrored the state population decline. Locally, another factor adding stress to the equation of whether to stay in Alaska or venture elsewhere is the continued high cost of home heating. In cold winters and years with high costs for heating fuel, some residents’ fuel costs exceed their mortgage payments. The Legislature and former Gov. Sean Parnell acknowledged the issue and set funds aside for the Interior Energy Project, aiming to get lower-cost natural gas to Fairbanks and North Pole. But higher-than-expected cost projections for natural gas necessitated the refocusing of the project on a broader range of options, primarily Cook Inlet natural gas. That has led to continued uncertainty about when — and if — the Interior will finally get energy relief.
Not all the indicators for the state are trending in the wrong direction. Increased military commitments to Interior bases have become a trend over the course of the past year as the military shifts to a Pacific-facing strategic posture. That kind of commitment is heartening news for the Interior, where the military and the University of Alaska Fairbanks are major drivers of local jobs and economic activity. And it will go some distance toward stemming the loss of population as military members and their families arrive from other duty stations.
It’s also worth remembering there’s nothing written in stone saying Alaska’s population must grow continuously for the state to be healthy. As a matter of fact, there are many of us who think there are plenty of people here already. The issue: Population declines are usually a sign of poor economic health. Alaska last saw population decreases during the painful mid-1980s recession that saw the departure of thousands of state residents and many downtown Fairbanks businesses.
How should the state ensure this population decline isn’t a signal of a 1980s-caliber recession in the wings? The answer revolves around energy and jobs. Low-cost energy is needed for the Interior and rural communities where economic activity is hamstrung by the cost of fuel. Jobs are needed in areas of the economy that will help Alaska move away from its overwhelming dependence on oil as the state’s cash cow. That’s a tougher course to chart, since it’s hard to identify an industry that could provide the same level of revenue and jobs on a sustainable basis.
But it’s not impossible. Alaskans are a resilient and resourceful people, and can rise to meet the challenge facing them in the twilight of oil’s dominance. The Last Frontier’s future doesn’t hinge solely on its population count.
— Fairbanks Daily News-Miner,