2011 Valdez
With the exception of the North Slope Borough, no other city or borough in Alaska is more influenced by oil than Valdez, the terminus of the 800-mile trans-Alaska pipeline and the site of the marine terminal from which oil is loaded onto oil tankers and transported to refineries, mainly on the U.S. West Coast. The arrival of oil in Valdez pushed the city’s population from about 1,000 in 1970, where it had been for decades, to 3,000 by 1980 and then 4,000 by 1990. The city’s 2010 population was 3,976. The marine terminal, Petro Star’s Valdez refinery, and other pipeline facilities within the city create a large tax base that per capita is about ten times as large as the Alaska average and is surpassed only by the North Slope Borough.
An additional source of revenue dates back to the 1970s when the owners of the pipeline system paid the city $13.5 million in exchange for letting them use the city’s bonding authority to issue tax-exempt bonds. That windfall was used to create the Valdez Permanent Fund, whose principal is protected by law. Since 1987, the Valdez City Council has made a policy of not appropriating fund earnings to annual operating and capital budgets. That policy and additional financing fees have enabled the fund to grow considerably over the years.
Key Findings
- Primary Companies and oil and gas support services companies with operations in Valdez provided 398 jobs and account for $49 million in annual payroll, by place of work.
- A total of 374 Primary Company or oil and gas support services company employees reside in Valdez, with annual payroll of $44 million.
- Including all direct, indirect, and induced effects, the oil and gas industry generated 700 jobs in Valdez and total annual payroll of $57 million.
- Local oil-related property taxes totaled $43 million in 2010, 90 percent of the city’s total property tax revenue.
Direct Employment and Payroll
Primary Company employment (by place of work) in Valdez averaged 297 in 2010, with total annual payroll of $40 million. The number of Primary Company jobs held by Valdez residents was only slightly less at 285, with total payroll of $38 million paid to Valdez residents.
Indirect and Total Oil and Gas Industry Related Employment
Primary Company activity generates three categories of indirect and induced employment and payroll. The first is the group of companies categorized in government statistics as oil and gas support services. A total of 89 Valdez residents worked in these companies and received annual payroll of $6 million in 2010.
There were another 50 jobs and $4 million in payroll paid to Valdez residents working for firms that directly provided goods and services to the Primary Companies but were categorized in sectors other than oil and gas support services (e.g., transportation, construction, and professional and business services).
Additionally, as support services companies purchase goods and services in support of their operations, and as local employees of oil and gas industry firms spend their payroll dollars in Valdez, additional jobs and income are created. These subsequent cycles of spending created about 276 indirect and induced jobs in Valdez, and $9 million in payroll. Combining the direct, indirect, and induced effects, the oil and gas industry generated 700 jobs and $57 million in payroll.
Although not enough data was available to produce a reliable estimate of the percentage of employment in Valdez tied to oil and gas, an estimated one-quarter of all employment and one-third of the community’s total earnings came from the oil and gas industry, either directly or indirectly. That number is very conservative, given that it does not attempt to quantify the direct and indirect payroll impacts of Valdez’s considerable oil-related tax revenue.
Oil and Gas Jobs in Valdez by Place of Work and Place of Residence
The following graph and table illustrate two different aspects of the oil and gas industry’s employment impact on Valdez: employment by place of work and employment by place of residence. This study defines the direct economic impact of the industry as the Valdez resident employment and payroll in Primary Companies – because those payroll dollars are the ones most likely to circulate through the local economy in spending on housing, goods and services, taxes, etc. There is also economic relevance to the number of industry jobs located in Valdez.
Data by place of work and place of residence was available for Primary Companies and for companies designated in government statistics as oil and gas support services. Combined employment for the two categories by place of work averaged 398 in 2010, slightly more than the 374 jobs held by Valdez residents. The payroll difference is similar with $49 million being paid to people who work in Valdez, wherever they may live, and $44 million going to Valdez residents specifically.
Valdez’s Largest Employers
Alyeska Pipeline Service Company was Valdez’s second largest private sector employer during the third quarter of 2010 and would be the largest if job numbers were averaged over the course of a full calendar year. Much of Valdez local government is also funded by oil and gas revenues – including $43 million in oil and gas property taxes in 2010, which was 90 percent of all city property tax revenue and 89 percent of all revenue combined.
