The number of jobs in Alaska’s oil and gas industry remains relatively low, after companies cut nearly a third of the workforce during the COVID-19 pandemic.
And like other oil producing states — whose economies benefit greatly from those well-paying jobs — the failure to rebound has slowed Alaska’s overall economic recovery.
That’s according to state economists and recent reporting by the Anchorage Daily News.
ADN reporter Alex DeMarban says there are many factors and many uncertainties, but it’s clear the lack of jobs in Alaska’s oil industry has an outsized impact on the state.
The following transcript has been lightly edited for clarity.
Alex DeMarban: Mainly because they do pay so much — $170,000 on average for these jobs, almost three times more than every other average job out there in Alaska. So just a phenomenal amount of money that if it stays in state can be spent all over the place — at restaurants and bars and clothing stores It’s important to note that one-third of the workforce, traditionally, for the oil industry has lived out of state. But that still leaves two-thirds to spend those big checks all over the place.
Casey Grove: The folks who know about this stuff, the economists, what do they say about why those job numbers are so low?
AD: Well, it’s interesting, because we’ve got kind of some of the older challenges that Alaska’s oil industry has often faced, like political challenges and legal challenges from conservation groups. And, you know, they’ve helped to slow projects over the years and limit kind of availability of jobs. But then we’ve now got banks that are saying they are not financing new Arctic projects for the industry. And then we’ve also got this unique situation that we’re all facing with pandemic problems, supply shortages, inflation, labor shortages. So it’s a mix of old and new things.
There’s also some increased efficiency in the oil patch. But I don’t know that that’s a tremendous thing that’s happened lately — there was already increasing efficiency. But economists have said that every time oil prices get tight and companies cut back, they always find a way to be more efficient when they come back. Another big factor is that Hilcorp took over operation of the Prudhoe Bay fields. And hundreds of workers did not move over from BP, who was the previous operator. So that was also a big contributor to the losses. So yeah, so old and new problems.
CG: And the big new one, right, is COVID? And it’s kind of a double-whammy, just by itself, that the global economy sort of slowed down. People didn’t have as much demand for oil. But then also, there were major concerns about worker safety related to COVID, right?
AD: Yeah, of course, it was disappointing. But also fascinating to see. There was a huge shutdown, for the most part. I mean, of course, the oil still flowed. But there were cutbacks, wherever there could be. And Hilcorp stopped drilling in April of 2020, ConocoPhillips shut down projects, and it was just an amazing slamming on the brakes.
CG: Are those things still going to be problems that limit the number of jobs in the oil industry here in the near future?
AD: The economists who I spoke with are generally hopeful that a lot of the pandemic-related challenges are going to subside. But I think most people would also agree that the problems we have have dragged on longer than expected. So, who knows, but the labor shortages, the inflation — the economists are hoping that oil companies can adjust to those changes, maybe by spring or summer of next year, and there’ll start to be more of a growth in the oil industry jobs. But everyone is really guessing. And some notable experts in the field like Neal Fried, the state economist, would not even take a guess. Some economists had even suggested this is kind of a new normal for us that, you know, getting back to 10,000 jobs — which was what the industry had right before the pandemic — could be years, if ever.