The state budget may be grim but Alaska’s construction industry as a whole should have another good year, according to a University of Alaska Anchorage Institute of Social and Economic Research forecast. The 2015 construction outlook predicts a total spend of more than $8.5 billion statewide. That would be a 3 percent decline from the revised 2014 projection of $8.8 billion worth of construction activity in Alaska.
It’s a seeming paradox: Oil prices are still sliding as North Slope crude closed at about $55 per barrel Jan. 6, but this year’s winter construction season is shaping up to be one of the strongest ever. Industry employment, the most reliable indicator of activity, set new records in October and November, according to data from the Alaska Department of Labor and Workforce Development.
The collapse of oil prices sent shock waves through state government and Alaska’s business community late in the year. Prices dropped from $110 per barrel in July to about $56 per barrel in mid-December. State revenues, about 90 percent dependent on oil taxes and royalties, are now estimated to be about half of what was predicted earlier, about $2.5 billion in unrestricted general fund revenue, down from about $5 billion.