Thousands of Alaskans have rejoined the workforce and oil prices are surging. But Alaska’s oil industry, which has powered the state’s economy in the past, isn’t seeing job growth like other trades are.
Oil and gas companies cut more than 3,000 workers during the COVID-19 pandemic, close to one-third of the workforce.
Other sectors in Alaska also had huge losses. But most of them are now experiencing year-over-year job growth, while the oil industry isn’t, according to state figures released Friday.
Observers say oil producers took a heavy hit last spring in the early days of the pandemic. With oil prices falling to record lows and concerns for worker safety, companies slammed the brakes on projects.
Also last year, Hilcorp took over BP’s assets in Alaska, including operation of the state’s biggest oil fields at Prudhoe Bay. But hundreds of BP workers didn’t move over to Hilcorp, contributing to the losses, observers said.
A year and half later, oil prices have shot past $80 a barrel for the first time in three years.
But people knowledgeable about the industry say the jobs recovery in the oil patch has been hobbled in part by pandemic-related disruptions like worker shortages and inflation.
There are multiple other factors. They include resistance from the Biden administration, restricting drilling opportunities on federal land in Alaska; legal attacks from conservation groups, halting ConocoPhillips’ Willow and Hilcorp’s Liberty projects in the Arctic; and banks that won’t finance new Arctic projects amid growing concerns about climate change, a factor in the uncertainty surrounding Oil Search’s large Pikka project.
Neal Fried, an economist with the Alaska Department of Labor and Workforce Development, said the industry’s job numbers typically follow the price of oil up or down. But it can take time for them to respond.
Still, economists had expected that the oil industry’s job count would have recovered more by now, he said.
The slow growth in those jobs is helping hold back the state’s overall economic rebound, he said.
Oil and gas workers make $170,000 annually on average, nearly three times the average for all other jobs, he said.
Even with one-third of the industry’s workers living out of state, the limited hiring in the industry means a lot of money isn’t being spent at stores and restaurants in the state.
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Alaska is one of only five states that have not recovered more than half the jobs lost during the pandemic, Fried said.
Three of those other states are also top oil producers: Wyoming, New Mexico and Louisiana. When industry jobs were shed there, they also lost the powerful “multiplier…
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