Impact Trans-Alaska Pipeline System

1 impact

1.1 boomtowns
1.2 economy of alaska
1.3 oil prices
1.4 social impact

impact

the construction of trans-alaska pipeline system , completion in 1977 had immense effect on alaska, united states, , rest of world. impact has included economic, physical, , social repercussions running gamut life in small towns global oil market.

boomtowns

water overflowed banks of chena river in august 1967, flooding fairbanks , fort wainwright.

construction of pipeline caused massive economic boom in towns , down pipeline route. prior construction, residents in towns fairbanks—still recovering devastating 1967 fairbanks flood—strongly supported pipeline. 1976, after town s residents had endured spike in crime, overstressed public infrastructure, , influx of people unfamiliar alaska customs, 56 percent said pipeline had changed fairbanks worse. boom greater in valdez, population jumped 1,350 in 1974 6,512 summer of 1975 , 8,253 in 1976.

this increase in population caused many adverse effects. home prices skyrocketed—a home sold $40,000 in 1974 purchased $80,000 in 1975. in valdez, lots of land sold $400 in late 1960s went $4,000 in 1973, $8,000 in 1974, , $10,000 in 1975. home , apartment rentals correspondingly squeezed upward rising prices , demand pipeline workers. two-room log cabins no plumbing rented $500 per month. 1 two-bedroom home in fairbanks housed 45 pipeline workers shared beds on rotating schedule $40 per week. in valdez, apartment rented $286 per month in december 1974 cost $520 per month in march 1975 , $1,600 per month—plus 2 mandatory roommates—in april 1975. hotel rooms sold out far away glenallen, 115 miles (185 km) north of valdez.

the skyrocketing prices driven high salaries paid pipeline workers, eager spend money. high salaries caused corresponding demand higher wages among non-pipeline workers in alaska. non-pipeline businesses not keep demand higher wages, , job turnover high. yellow cab in fairbanks had turnover rate of 800 percent; nearby restaurant had turnover rate of more 1,000 percent. many positions filled high school students promoted above experience level. meet demand, fairbanks high school ran in 2 shifts: 1 in morning , other in afternoon in order teach students worked 8 hours per day. more wages , more people meant higher demand goods , services. waiting in line became fact of life in fairbanks, , fairbanks mcdonald s became no. 2 in world sales—behind opened stockholm store. alyeska , contractors bought in bulk local stores, causing shortages of cars tractor parts, water softener salt, batteries , ladders.

the large sums of money being made , spent caused upsurge in crime , illicit activity in towns along pipeline route. exacerbated fact police officers , state troopers resigned in large groups become pipeline security guards @ wages far in excess of available in public-sector jobs. fairbanks second avenue became notorious hangout prostitutes, , dozens of bars operated throughout town. in 1975, fairbanks police department estimated between 40 , 175 prostitutes working in city of 15,000 people. prostitutes brought pimps, engaged in turf fights. in 1976, police responded shootout between warring pimps wielded automatic firearms. , large, however, biggest police issue number of drunken brawls , fighting. on pipeline itself, thievery major problem. poor accounting , record keeping allowed large numbers of tools , large amounts of equipment stolen. los angeles times reported in 1975 many 200 of alyeska s 1,200 yellow-painted trucks missing alaska , scattered miami mexico city . alyeska denied problem , said 20–30 trucks missing. theft problem typified pipeliners practice of mailing empty boxes pipeline camps. boxes filled items , shipped out. after alyeska ruled packages had sealed in presence of security guard, number of packages being sent camps dropped 75 percent.

economy of alaska




alaska historian terrence cole

since completion of trans-alaska pipeline system in 1977, government of state of alaska has been reliant on taxes paid oil producers , shippers. prior 1976, alaska s personal income tax rate 14.5 percent—the highest in united states. gross state product $8 billion, , alaskans earned $5 billion in personal income. thirty years after pipeline began operating, state had no personal income tax, gross state product $39 billion, , alaskans earned $25 billion in personal income. alaska moved heavily taxed state tax-free state.

the difference trans-alaska pipeline system , taxes , revenue brought alaska. alyeska , oil companies injected billions of dollars alaska economy during construction effort , years afterward. in addition, taxes paid companies altered tax structure of state. 1982, 5 years after pipeline started transporting oil, 86.5 percent of alaska revenue came directly petroleum industry.

the series of taxes levied on oil production in alaska has changed several times since 1977, overall form remains same. alaska receives royalties oil production on state land. state has property tax on oil production structures , transportation (pipeline) property—the state property tax in alaska. there special corporate income tax on petroleum companies, , state taxes amount of petroleum produced. production tax levied on cost of oil @ pump station 1. calculate tax, state takes market value of oil, subtracts transportation costs (tanker , pipeline tariffs), subtracts production costs, multiplies resulting amount per barrel of oil produced each month. state takes percentage of dollar figure produced.

under latest taxation system, introduced former governor sarah palin in 2007 , passed alaska legislature year, maximum tax rate on profits 50 percent. rate fluctuates based on cost of oil, lower prices incurring lower tax rates. state claims 12.5 percent of oil produced in state. royalty oil not taxed sold oil companies, generating additional revenue. @ local level, pipeline owners pay property taxes on portions of pipeline , pipeline facilities lay within districts impose property tax. property tax based on pipeline s value (as assessed state) , local property tax rate. in fairbanks north star borough, example, pipeline owners paid $9.2 million in property taxes—approximately 10 percent of property taxes paid in borough.

alaska oil production peaked in 1988.

the enormous amount of public revenue created pipeline provoked debates windfall. record $900 million created prudhoe bay oil lease sale took place @ time when entire state budget less $118 million, yet entire amount created sale used 1975. taxes on pipeline , oil carried promised bring more money state coffers. ensure oil revenue wasn t spent came in, alaska legislature , governor jay hammond proposed creation of alaska permanent fund—a long-term savings account state. measure required constitutional amendment, duly passed in november 1976. amendment requires @ least 25 percent of mineral extraction revenue deposited in permanent fund. on february 28, 1977, first deposit—$734,000—was put permanent fund. deposit , subsequent ones invested entirely in bonds, debates arose style of investments , should used for.

in 1980, alaska legislature created alaska permanent fund corporation manage investments of permanent fund, , passed permanent fund dividend program, provided annual payments alaskans interest earned fund. after 2 years of legal arguments should eligible payments, first checks distributed alaskans. after peaking @ more $40 billion in 2007, fund s value declined approximately $26 billion of summer 2009. in addition permanent fund, state maintains constitutional budget reserve, separate savings account established in 1990 after legal dispute on pipeline tariffs generated one-time payment of more $1.5 billion oil companies. constitutional budget reserve run similar permanent fund, money can withdrawn pay state s annual budget, unlike permanent fund.

oil prices

nominal , real price of oil, 1971–2007

although trans-alaska pipeline system began pumping oil in 1977, did not have major immediate impact on global oil prices. partly because took several years reach full production , partly because u.s. production outside alaska declined until mid-1980s. iranian revolution , opec price increases triggered 1979 energy crisis despite taps production increases. oil prices remained high until late 1980s, when stable international situation, removal of price controls, , peak of production @ prudhoe bay contributed 1980s oil glut. in 1988, taps delivering 25 percent of u.s. oil production. north slope oil production declined, did taps share of u.s. production. today, taps provides less 17 percent of u.s. oil production.

social impact

the pipeline attracts tens of thousands of visitors annually on pipeline tourism trips. notable visitors have included henry kissinger, jamie farr, john denver, president gerald ford, king olav v of norway, , gladys knight. knight starred in 1 of 2 movies pipeline construction, pipe dreams. other film joyride, , both critically panned. other films, such on deadly ground , 30 days of night, refer pipeline or use plot device.

the pipeline has inspired various forms of artwork. notable form of art unique pipeline pipeline maps—portions of scrap pipe cut shape of alaska piece of metal delineating path of pipeline through map. pipeline maps created welders working on pipeline, , maps sold tourists or given away gifts. other pipeline-inspired pieces of art include objects containing crude oil has been transported through pipeline.

migrant workers take majority of jobs created pipeline, causes dispute , hostility between migrant communities , local inuit people. however, many local inuits rely on pipeline , oil industry income. source of heat , energy locals.