Shutdown blow to Alaska’s economy

Almost 89 percent of state’s income comes from oil revenue

ANCHORAGE, Alaska – Picture Alaska and most people in the Lower 48 think abundant forests, picturesque bears, frosted tundra and perhaps the odd salmon.

But what about oil? While there’s plenty of scenic vistas for tourists to enjoy here, for better or worse Alaska’s economy gets considerable power from the oil industry. BP’s decision last week to shut down part of the nation’s largest oil field shows just how dependent the state has grown on oil, and how much it has to lose if the industry slips up.

Alaska receives 89 percent of its income from oil revenue, and the state has no state sales tax and no personal income tax. Economist Patrick Burden also estimates that about a third of the state’s overall economy is fueled by the oil industry. Another third is powered by state government, while the rest comes from other industries.

Experts say the net effect of the oil industry on the large, sparsely populated state is huge. The industry, which drew workers here decades ago to build the massive trans-Alaskan pipeline, has continued to supply high-paying jobs that, in turn, feed spending in the service economy and other areas.

Without oil, Alaska “would be a very, very small economy with limited infrastructure and vastly fewer people,” said Burden, who is president of Northern Economics.

MSNBC