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Alaskan economy in the 2000s


Alaska oil pipeline
Alaska oil pipeline

In the 2000s the Alaskan economy continued to depend heavily on taxes and royalties from oil and natural gas. In 2005 crude oil accounted for 86 percent of the state’s general revenues. Production of oil from the North Slope has declined by nearly half since a peak in 1988, but reductions in production were offset by a rise in the price of oil in the 2000s, allowing the state to accumulate a budget surplus.

Sustaining the revenue from oil and gas has been among the reasons given by the advocates of drilling in the Arctic National Wildlife Refuge (ANWR), which borders the North Slope fields and which is currently protected from development. An estimated 10.4 billion barrels of oil may lie untapped in ANWR. Opening ANWR to drilling had been strongly promoted by Republican governor Frank Murkowski and Republican U.S. senator Ted Stevens. Federal legislation to allow drilling in ANWR has been repeatedly blocked in the U.S. Congress. Debate has focused in part on whether the amount of oil available would justify the expense of development and the potential environmental risks to an undisturbed wilderness area.

Increases in the price of oil were expected to improve state revenues in 2006, but the partial shutdown of a portion of the Prudhoe Bay complex in August and September meant a reduction in the amount of oil sold. BP, the company that operates part of the North Slope oil fields, discovered serious corrosion in part of the pipelines after a small leak, and closed a section at Prudhoe Bay for replacements and repairs. The partial shutdown came after a major leak in the pipeline in March 2006. Up to 267,000 gallons of oil may have spilled before the March leak was detected.

The incidents raised questions about the condition of the aging pipeline and about the adequacy of the technologies and monitoring procedures used to test for corrosion and leaks. A Congressional committee investigated BP’s maintenance of its portion of the Alaska pipeline and criticized the company's practices.

Environmental groups cited the recent pipeline leaks and shutdown as evidence that drilling in ANWR could pose serious risks to the environment despite improved technology.

Political Corruption and New Governor


The Federal Bureau of Investigation (FBI) began looking into political corruption in Alaska in 2004, although the investigation only became known in 2006 after the bureau served search warrants on the offices of government officials, especially state legislators. The corruption scandal involved money paid illegally by seafood companies and an oilfield services company, and the offices were searched for evidence of financial ties between the legislators or their staff and the companies. A number of state legislators and U.S. senator Ted Stevens were indicted; executives of Veco, the oilfield services company, and a few political lobbyists pled guilty. One of the lobbyists had been chief of staff for Alaska governor Frank Murkowski; he admitted secretly channeling money from Veco for Murkowski’s reelection campaign in 2006. Dissatisfaction with Murkowski led to a challenge in the 2006 Republican Party primary from Sarah Palin, a social and fiscal conservative who first gained attention as a whistle-blower in a scandal involving state government. Palin emerged as the victor in the primary, and she went on to win the general election. She took office as the state’s first female governor in December 2006. Palin became the Republican Party’s candidate for vice president in 2008 when she was named to the ticket by presidential candidate John McCain. "USA" © Emmanuel BUCHOT, Encarta, Wikipedia

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