BP trims cost-of-living, travel money for workers

Posted: Wednesday, January 23, 2002

ANCHORAGE (AP) -- BP Exploration (Alaska) Inc. is trimming its cost-of-living allowance and travel money for nearly half of its 1,200 Alaska workers.

The move comes two weeks after the company announced that 195 workers in Anchorage would be laid off.

BP's cost-of-living program provides salaried workers an allowance of 20 percent of their base pay or $20,000, whichever is less. Next year BP will reduce the allowance to 15 percent, with a $15,000 cap, BP spokesman Ronnie Chappell said.

The oil company is also cutting a program that annually gives salaried employees and their family members in Alaska $800 each to help cover vacation travel, said spokesman Ronnie Chappell.

The moves are part of BP's ongoing effort to control costs while ensuring workers receive fair compensation ''in recognition of the remoteness of Alaska,'' he said. The company says it hopes the cuts will save several million dollars a year.

Competitor Phillips Alaska Inc. offers a cost-of-living allowance identical to BP's, as well as the $800-per-family-member travel allowance. Phillips has no plans to change them, said spokeswoman Dawn Patience.

Oil companies are among a number of businesses that compensate workers to offset Alaska's higher cost of living compared with other parts of the country.

Most federal employees in Anchorage receive a 25 percent tax-free cost-of-living allowance.

Neal Fried, a state labor economist, said such allowances were probably more common years ago in Anchorage, when a larger gap existed between the city's cost of living and the rest of the country.

BP reviewed living costs in other North American cities where it operates and found Anchorage falls somewhere between the most expensive and least expensive, Chappell said.

''In the end, our decision was based on keeping our business in Alaska competitive by containing costs and still offering a competitive compensation program,'' he said.

BP also said it was shelving plans for a $600 million Beaufort Sea development known as Liberty because the development did not make financial sense. The company also said it is scaling back frontier exploration on the North Slope.

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