Economy of Alaska

Alaska proven oil reserves peaked in 1973 and have declined more than 60% since then.

Alaskan oil production peaked in 1988 and has declined more than 75% since then.

Alaska has vast energy resources. Major oil and gas reserves are found in the Alaska North Slope (ANS) and Cook Inlet basins. According to the Energy Information Administration, Alaska ranks fourth in the nation in crude oil production. Prudhoe Bay on Alaska's North Slope is the highest yielding oil field in the United States and on North America, typically producing about 400,000 barrels per day (64,000 m³/d).

The Trans-Alaska Pipeline can pump up to 2.1 million barrels (330,000 m³) of crude oil per day, more than any other crude oil pipeline in the United States. Additionally, substantial coal deposits are found in Alaska's bituminous, sub-bituminous, and lignite coal basins. The United States Geological Survey estimates that there are 85.4 trillion cubic feet (2,420 km³) of undiscovered, technically recoverable gas from natural gas hydrates on the Alaskan North Slope.[12] Alaska also offers some of the highest hydroelectric power potential in the country from its numerous rivers. Large swaths of the Alaskan coastline offer wind and geothermal energy potential as well.[13]

Alaska's economy depends heavily on increasingly expensive diesel fuel for heating, transportation, electric power and light. Though wind and hydroelectric power are abundant and underdeveloped, proposals for statewide energy systems (e.g. with special low-cost electric interties) were judged uneconomical (at the time of the report, 2001) due to low (<$0.50/Gal) fuel prices, long distances and low population.[14] The cost of a US gallon of gasoline in urban Alaska today is usually $0.30–$0.60 higher than the national average; prices in rural areas are generally significantly higher but vary widely depending on transportation costs, seasonal usage peaks, nearby petroleum development infrastructure and many other factors.

In 2012, Alaska accounted for 8.1% of American crude oil production, ranking behind Texas (30.6%), North Dakota (10.2%), and California (8.3%).[15]

See: Gold mining in Alaska

Tourism in Alaska is the second-largest private sector employer, accounting for one in eight Alaskan jobs, nearly 2 million visitors, and $2.42 billion in direct visitor spending including labor income.[16] Nearly half the visitors arrive to Alaska through the cruise industry including Carnival Cruise Line, Celebrity Cruises, Crystal Cruises, Disney Cruise Line, Holland America Line, Norwegian Cruise Line, Oceania Alaskan Cruises, Princess Cruises, Regent Seven Seas Cruises, Royal Caribbean Cruises Ltd., Silversea Cruises, Seattle Alaskan Cruises, and Vancouver Alaskan Cruises.[17] Other visitors arrive via the Ted Stevens Anchorage International Airport, driving along the main road access to the state, the Alaska Highway, or aboard the Alaska Marine Highway. In his 2015 state of the State address, Alaska Governor Bill Walker referred to the tourism industry as a "healthy and vital industry which showcases a dynamic partnership between private enterprise and state and local government, one that has the potential of limitless growth and contribution to our economic well-being.[18]

Tourism is also a contributor to the state's general fund through various taxes, including a commercial passenger vessel excise tax rate of $34.50 per passenger, per voyage.[19] Other taxes generated through tourism include a 10% tax on vehicle rentals,[20] as well as local sales and bed taxes.

According to a study prepared for the State of Alaska by the McDowell Group, "spending by Alaska visitors in 2014-15 was distributed widely throughout the state’s economy. Lodging, tours/activities, gifts/souvenirs, and food/beverage each accounted for about one-fifth of spending (18 to 20 percent)", while the remaining fifth includes packages and transportation.[21]

Visitors are attracted to Alaska by various experiences often tied to the natural and vast characteristics of the landscape, wildlife, and culture of the state. There are many guided activities that provide a way for visitors to access these experiences and for local and multi-national companies alike to conduct business. Guided activities include sightseeing tours, whale watching, glacier viewing, flightseeing, wildlife viewing, hiking, ziplining, kayaking/rafting, and fishing.[22] Fishing alone accounts for $652,498,723 in annual spending by non-residents including purchases of licenses, guides, equipment, and repair.[23]

A top destination for tourism in Alaska includes the State's National Park system, featuring 24 units. Annually these national parks collectively are visited by 2.6 million people and contribute a $1.1 billion economic benefit.[24]

A farm in the Matanuska Valley

Due to the northern climate and steep terrain, relatively little farming occurs in Alaska. Most farms are in either the Matanuska Valley, about 40 miles (64 km) northeast of Anchorage, or on the Kenai Peninsula, about 60 miles (97 km) southwest of Anchorage. The short 100-day growing season limits the crops that can be grown, but the long sunny summer days make for productive growing seasons. The primary crops are potatoes, carrots, lettuce, and cabbage. Farmers exhibit produce at the Alaska State Fair. "Alaska Grown" is used as an agricultural slogan.

Alaska has an abundance of seafood, with the primary fisheries in the Bering Sea and the North Pacific, and seafood is one of the few food items that is often cheaper within the state than outside it. Many Alaskans fish the rivers during salmon season to gather significant quantities of their household diet while fishing for subsistence, sport, or both.

Hunting for subsistence, primarily caribou, moose, and Dall sheep is still common in the state, particularly in remote Bush communities. An example of a traditional native food is Akutaq, the Eskimo ice cream, which can consist of reindeer fat, seal oil, dried fish meat and local berries.

Alaska's reindeer herding is concentrated on the Seward Peninsula where wild caribou can be prevented from mingling and migrating with the domesticated reindeer.[25]

Most food in Alaska is transported into the state from "Outside", and shipping costs make food in the cities relatively expensive. In rural areas, subsistence hunting and gathering is an essential activity because imported food is prohibitively expensive. The cost of importing food to villages begins at 7¢ per pound (15¢/kg) and rises rapidly to 50¢ per pound ($1.10/kg) or more. The cost of delivering a 1 US gallon (3.8 L) of milk is about $3.50 in many villages where per capita income can be $20,000 or less. Fuel cost can exceed $8.00 per gallon.