AOGA

Fairbanks Impacts

Fairbanks North Star Borough

Summary of Impacts

Altogether the oil and gas industry is responsible for the creation of 3,250 jobs for the Fairbanks area with wages to Fairbanks residents of $176 million – 5.5 percent of total employment in the borough and 5.9 percent of total payroll.

• Total oil and gas industry direct employment of FNSB residents by the primary companies was 353 in 2007 with payroll of $39.4 million.
• The industry reported contracts of at least $500,000 with each of 35 local Fairbanks businesses – this number does not include businesses operating in Fairbanks but with primary headquarters in other Alaska locations. This primary company spending in Fairbanks created 653 support activity jobs located in the borough with an associated $54.5 million payroll.
• The total number of Fairbanks residents working in oil and gas industry support activity jobs is 709 in 2007 with wages of $59.5 million. These are jobs held by Fairbanks residents who work both in and outside the borough.
• The industry generated 2,897 indirect and induced jobs in the Fairbanks region in 2007.[19] Indirect jobs generate $136.6 million in payroll, including all support activity jobs held by Fairbanks residents.

The Fairbanks North Star Borough is the second most populated region in the state and the City of Fairbanks is the second largest city. The borough population has grown slowly but steadily to reach an estimated 96,888 in 2007. The average annual wage for an individual working in Fairbanks was $40,375 in 2006.

The largest employers in the Fairbanks area are in the public and healthcare sectors. The largest private employer is Banner Health System operating Fairbanks Memorial Hospital with 1,302 employees in 2007. Fairbanks serves as a hub to interior communities for healthcare services. In the public sector the FNSB School District and the University of Alaska Fairbanks are the largest employers.

Table 24: Ten Largest Employers, FNSB

Firm	Employees
State Government (including UAF)	5,044
Federal Government	3,492
Fairbanks North Star School District	1,539
Banner Health System	1,302
Fred Meyer Stores Inc.	654
Wal-Mart Associates Inc.	507
Fairbanks North Star Borough	497
Fairbanks Gold Mining Inc.	392
Chugach Management Services Inc.	313
Tanana Chiefs Conference Inc.	284

Source: DOLWD

Role of the Oil and Gas Industry in the Fairbanks North Star Borough

The oil and gas industry shaped modern Fairbanks during construction of the Trans-Alaska Pipeline System (TAPS) and the industry has played an important role in the area since. Alyeska Pipeline Service Company, while headquartered in Anchorage, has regional offices in Fairbanks and Valdez with 144 Fairbanks residents working in pipeline service at the Fairbanks location in 2007.

Table 25 describes direct employment with oil and gas industry primary companies and support activity by place of work. These are jobs with sites located within FNSB. Fairbanks area employment includes TAPS employees, the Flint Hills refinery in North Pole, and a large number of support activities jobs. Direct and support activity employment averaged 1,062 jobs in 2007, with $98.9 million in total payroll. Please note that the table does not display all employment payroll numbers, this is to protect the confidentiality of the companies and their employees.

Table 25: Direct Oil & Gas Primary and Support Activity Employment and Payroll by Place of Work,
Fairbanks North Star Borough

Fairbanks North Star Borough Direct Impacts	Oil & Gas Extraction	Refinery	Pipeline	Total Direct Employment	Support Activities	Total
Employment	1	167	144	312	653	965
Payroll ($ millions)	*	*	*	$34.7	$54.5	$89.2

Source: DOLWD data and Study Team estimates.

To draw a comparison, consider that the University of Alaska Fairbanks had an average of 3,417 employees in 2006 – nearly ten times as many as oil and gas industry direct employment – yet UAF total payroll only outpaced oil and gas industry payroll by 3.7 times. What this means is that on average oil and gas industry wages are substantially higher than university wages. The importance of high wage jobs for the economy in Fairbanks is that every dollar spent on household goods and service stimulates the economy, creating additional employment opportunities. Each oil and gas industry job does more to create employment and economic activity than a job in a sector of the economy with lower wages.

The indirect and induced impact of the oil and gas industry in the Fairbanks area is estimated at 2,897 jobs with $136.6 million in annual payroll – these numbers include support activity jobs, including those held by Fairbanks residents working elsewhere. These jobs are created by businesses and organizations that provide goods and services to the oil industry and the households of its employees. Indirect and induced business produced a total economic output of approximately $514 million, with value-added of $371 million.

Table 26 shows the number of indirect jobs, gross payroll and value added that the oil and gas industry generated in the Fairbanks region in 2007.

Table 26: Oil & Gas Industry Indirect Employment, Payroll, Value Added and Output, Fairbanks 2007

Indirect Jobs	Gross Pay ($ millions)	Value Added ($ millions)	Output ($ millions)
2,841	$131.6	$371.4	$513.7

The pie charts in Figure 6 show the distribution of these jobs and payroll within the economy.

Figure 6: Distribution of Indirect Jobs and Payroll, Fairbanks

Table 27 illustrates the difference between employment numbers and payroll by place of work and by place of employee residence. The estimated 97 employees who work outside the borough but live within its boundaries stimulate the local economy through their spending.

Table 27 : Direct Oil & Gas Primary and Support Activity Employment and Payroll

by Place of Work and Place of Residence, Fairbanks

Fairbanks North Star Borough Direct and Indirect Impacts	By Place of Work	By Place of Residence
Direct Employment	312	353
Direct Payroll ($ millions)	$34.8	$39.4
Support Employment	653	709
Support Payroll ($ millions)	$54.5	$59.5
Total Employment	965	1,062
Total Payroll ($ millions)	$89.2	$98.9

Source: DOLWD data and Study Team estimates.

Based on the best available data, the number of oil and gas industry workers employed in Fairbanks is very close to the number of local residents who earn income from the industry. An estimated 1,062 FNSB residents earned income through employment with primary companies or support activity, whether employed locally or elsewhere in Alaska. Their total payroll in 2007 was approximately $99 million.

Table 28 describes the total impact of the oil and gas industry on the FNSB economy. In total, the industry generated an estimated 3,250 jobs in the FNSB economy and for FNSB residents, with $176 million in payroll. With this level of employment, the oil and gas industry directly or indirectly accounted for approximately 5.5 percent of total FNSB employment and 5.9 percent of total payroll in 2007.

Table 28: Total Oil & Gas Industry-related Employment and Payroll by Place of Residence, Fairbanks

Fairbanks North Star Borough Impacts	By Place of Residence
Direct Employment	353
Direct Payroll ($ millions)	$39.4
Indirect and Induced Employment	2,897
Indirect and Induced Payroll ($ millions)	$136.6
Total Oil & Gas Industry-related Employment	3,250
Total Oil & Gas Industry-related Payroll ($ millions)	$176.0
Total FNSB Employment (2006)	59,080
Percent Oil & Gas Industry Related	5.5%
Total FNSB Payroll (2006, $ millions)*	$2,983.9
Percent Oil & Gas Industry Related	5.9%

*Includes wage and salary disbursements and proprietor’s income.
Source: FNSB employment and payroll data is from BEA.

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[19] These jobs were created by companies in support industries providing goods and services to the primary companies and by employees of both primary and support industry companies spending their personal income locally on consumer goods, other property, services and taxes.