By Molly Rettig. Rettig is a Fairbanks-based writer who previously worked for the Fairbanks Daily News-Miner and had her first book, Finding True North: firsthand stories of the booms that built modern Alaska, published this year.
You can almost hear the sighs of relief across Alaska each time oil prices tick up. The latest spike to more than $80 per barrel could add $1.2 billion to the state’s income this year, a nice bump after running a similarly sized deficit the past few years. There’s talk of restored funding for schools, mental health, and public safety, and maybe even a bonus PFD this spring.
This is good for Alaska, right? Actually, no. Because instead of forcing us to diversify our economy, which we have been dragging our feet on the past seven years (since oil crashed in 2014), this blip allows us to kick back, relax, and continue our monogamous relationship with oil–when we really need to be dating around.
Anyone who lived here before the pipeline days has seen this before–a feverish boom followed by an eventual bust, then a period of pain and panic while we wait for the next one. I interviewed many of these people for my recent book, Finding True North: Firsthand Stories of the Booms that Built Modern Alaska.
There was Clutch Lounsbury, whose grandparents took the Valdez Trail to Fairbanks in 1910 looking for gold, then fled back to Iowa a few years later when the gold dried up, trading in their gold pans for plows. Clutch’s dad grew up on the family farm but left in 1930 to try his own luck in Alaska, tunneling into the hillside in Ester. But when the price of gold froze at $35 an ounce, he had to shut down the mine and get a job as a mechanic.
A few decades later, in 1968, oil was discovered on the North Slope just when the nation was desperate for it. The lease sale alone brought in $900 million to Alaska, nine times more than the previous year’s state budget. Mike Kunz joined tens of thousands of others flocking north to work on the pipeline. When construction finished, he wasn’t ready to leave, so he found other odd jobs to support his family.
But then he injured his knee just as the oil market crashed and the bottom fell out of Alaska’s economy. He lost his job in construction, which meant he didn’t have enough money to complete the house he and his wife Patty were building in Fairbanks. Instead, they raised their kids in an unfinished basement, hauling wood and water for the next 30 years until they finally saved enough for plumbing.
There are plenty of recent examples to choose from, too. We all know teachers, scientists, and construction workers who lost their jobs in the latest recession, and either had to pivot to a new profession or pack up and head south. Back in 2016, I thought I might be one of them, when the research center where I work lost its funding. At the same time, my husband was facing cuts at DOT. We kept our jobs, luckily, but lost bookstores, restaurants, and shops we loved.
We all know how shaky it is to be dependent on a single resource. We would never invest our retirement funds this way. We certainly don’t do it with the Permanent Fund, which is invested in assets all over the world. Yet when it comes to the state budget, our shared pocketbook, we are totally comfortable relying on a single income stream. Since 1977, 80% of our general fund on average has come from oil money. We have no income tax, no sales tax, and no other form of revenue to fall back on. We watch that little barrel of oil on the Stock Exchange like it’s a heart rate on an EKG machine.
The momentary rise in oil prices does not fix our problems. Only diversifying our economy can do that. Fortunately, the bipartisan Infrastructure act just passed by Congress gives us an unprecedented chance to do that, and without raising any taxes. Let’s make it count! Let’s put it toward roads and bridges and power grids, which will help oil, gas, and mining as well as tourism and recreation. Let’s double down on energy efficiency, which is just common sense in a place like Alaska. And let’s invest in Alaska’s world-class wind, solar, tidal, hydro, and geothermal resources–creating a new boom that can carry us into the future. It won’t happen overnight–but neither did the oil pipeline.
The old sourdoughs I interviewed for my book always managed to weather the busts. They found new jobs, lived off the land, or–in some cases–left Alaska altogether. Things are different today. We have a large professional class, families who are rooted here, and an aging population. The busts hurt more. Let’s use the long lens of history to plan a better future.
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Molly Rettig is a Fairbanks-based writer. Her first book, Finding True North: firsthand stories of the booms that built modern Alaska, was published by the University of Alaska Press in March. Learn more at mollyrettig.com.
Resurrect the state’s fiscal policy task force.