Industry totals 15% of state's payroll

PHOTO/Rob Stapleton/AJOC
oilgas.jpg An economic survey of the petroleum industry’s impact on the state’s economy concludes that the industry and its contractors directly and indirectly contribute 15 percent of the state’s payroll and 8.3 percent of total employment.

For communities in the state where petroleum employees live, and where producing company regional offices and contractors are located, the percentages are higher, according to the survey.

In Anchorage, 16.2 percent of total payroll, or $740 million, comes from the industry, its contractors and suppliers. Some 16,323 jobs in the Municipality of Anchorage exist because of the industry, or 13 percent of total employment, the survey found.

The percentage is even higher on the Kenai Peninsula, where 26 percent of the jobs and 36 percent of the payroll comes from industry activities, according to the survey. Kenai Borough communities play a major role in supporting Cook Inlet oil activities, and many petroleum contractors working on the North Slope are based on the peninsula.

Brian Rogers of Fairbanks, who helped coordinate the project, said the petroleum industry’s economic impact in the state has been obscured because the data is reported in different ways by the state and federal agencies that monitor employment trends.

"Both the state and federal governments tend to blur the industry’s reach to the casual eye in their official economic reports," Rogers said. "Oil production is often referred to as ’mining,’ and oil refining may be folded into ’manufacturing’ without delineation. Pipeline operations are rolled into the broad category of ’transportation, communication and utilities.’ "

The survey was conducted by Rogers’ firm, Information Insights of Fairbanks, and McDowell Group of Juneau. Both consulting firms have done previous regional economic studies of economic impacts of the Fort Knox gold mine, the University of Alaska and the petroleum industry in Fairbanks.

The McDowell Group also has done studies of the tourism industry in Alaska over several years.

The petroleum industry study included in-depth reviews of payroll and purchasing records of 13 companies responsible for oil production, transportation and refining, and reviews of payroll and purchasing records of contractors and suppliers to the industry.

Excluded from the survey were the economic effects of state spending of petroleum revenues and Alaska Permanent Fund dividends paid to residents, which are from earnings of accumulated state oil and gas royalties paid into the fund.

The industry and contractor participation was coordinated through the Alaska Oil and Gas Association, a trade association for oil producers, and the Alaska Support Industry Alliance, the association for oil-support contractors and service companies.

Rogers said the statewide survey grew out of a similar study of the petroleum industry’s impact on the Fairbanks economy, also done by Information Insights and McDowell Group.

"That investigation provided surprises, findings that showed the industry’s role in the local economy has a far wider reach than was suspected," Rogers said.

02/03/2001 - 8:00pm