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Statistics point to mostly healthy outlook for future

Posted: Saturday, March 02, 2002

Irrefutably one of the most beautiful parts of Alaska, the Kenai Peninsula offers such a wealth of wonders, pursuits and possibilities that it approaches the prosaic to reduce that dynamism to mere numbers.

Yet the laws of governance and economics -- not to mention human curiosity -- demand a periodic accounting. So, dutifully, we log the statistics, map their meanings, measure the inescapable bottom line.

Late last month, the Kenai Peninsula Borough released two publications focusing on local economic indicators. Tracing conditions and trends in figures and graphs, they show a borough economy that is generally healthy. While some industries, such as fishing, are struggling with changing realities, others, like oil and gas, are making marked gains.

Situations and Prospects 2000 is an overview of the economy of 2000, the last year for which a full slate of statistics exists. Compiled and produced by Jeanne Camp, Kenai Peninsula Borough economic analyst with the borough's Community and Economic Development Division, it includes the latest national census figures for the borough and its incorporated cities, a labor snapshot, as well as statistical studies of the peninsula's five major industries -- commercial fishing, oil and gas, retail sales, timber and tourism. Noting the variety, state economists have identified the borough as "the most diverse economy in the state," according to the publication's executive summary.

The second document, also produced by Camp and the division, was the borough's latest Quarterly Report of Key Economic Indicators. It covers the third quarter of 2001, which ended Sept. 30. As such, its data focuses on the summer months, the year's most active period, measuring gross sales, taxable sales, construction, employment and population, all by industry and area. For comparison purposes, it also provides year-to-date figures through Sept. 30, 2001.

What effect the tragedy of Sept. 11 may have had on those numbers was not addressed.

Dry as the numbers may be, the two documents do paint a picture of the economy over the past couple of years, a view that analysts may be able to use in predicting near-term trends.

Here's a quick look at some of the more interesting numbers:

Demographics

Situations and Prospects notes that according to Census 2000, the borough's population has risen to 49,691 since 1990, a 21.8 percent increase, faster than Anchorage, faster than the state, faster than the nation.

By far, there are more whites in the borough, 86.2 percent, than members of any other race. There are slightly more males, 52 percent, than females, and the median age is still a relatively young 36.3 years. That's older, however, than the median age of all Alaskans, 32.4 years, and older, too, than the 35.3 years for all Americans. In 1990, the median age in the borough was just 31 years.

In the decade since, the percentage of residents newborn to 4 years old dropped, while the percentage of people 75 years and older increased.

Camp said she's not sure why the number of toddlers fell, but the fact that the number of young adults 20 to 24 years old is small compared with age groups both younger and older may have something to do with it. Those people might be expected to produce the greatest numbers of new babies. Many may be going Outside to college, perhaps even staying there.

As for the upswing in the number of the borough's oldest residents, the attractiveness of the peninsula to retirees may be boosting those figures.

Business

In business, gross sales reached to $1.72 billion, a 4.7 percent gain, following a 2 percent decline in 1999. Meanwhile, sales outside the five borough cities increased by 7.3 percent. Seldovia registered an 8 percent increase, Seward rose by 5.8 percent, Homer by 3.1 percent, Soldotna gained 2.9 percent and Kenai 0.4 percent.

The biggest reason for the rise in sales outside cities can be found in the manufacturing sector, specifically the petroleum industry, Camp said. Companies have increased their exploratory efforts, looking both for new sources and tapping long-known reserves that once were thought too costly to recover. New technology has changed that, Camp said.

Wholesale led the gross sales increase, but retail sales remained the dominant industry overall with 35.5 percent of all reported sales in the borough, according to Situations and Prospects. Taxable sales rose by 3.7 percent over 1999 to nearly $664 million.

The value of construction permits backed off 1999 numbers by falling 17.5 percent. In terms of dollars, 2000 saw commercial construction barely outpace residential construction, $10.7 million to $9.8 million.

Compared with 1999, there were slightly fewer available workers each month during 2000, but more of them actually had jobs. The effect was to lower the unemployment rate from 11.1 percent in 1999 to 9.9 percent in 2000. Monthly unemployment averages have risen again in 2001, Camp said.

"We were ahead of the game at the beginning of the year, but we're behind the game now," she said.

The size of the labor force has remained fairly stable. Did the booming economy Outside in 1999 and 2000, or the recession of 2001 have much of an impact either way on Alaska?

"I'd say there has been little to no impact," Camp said. The numbers are "in the ballpark from previous years."

Housing starts continued a decline begun in 1999. New starts have fallen from 622 in 1998 to 221 in 2000. However, construction appears to have staged a modest rebound in 2001, according to the quarterly report.

Falling prices and sparser harvests were indicative of the continuing decline in the commercial salmon fishing industry, which saw its ex-vessel value -- the value before processing -- fall from $26.4 million in 1999 to just $9 million in 2000. The halibut harvest also was down.

Oil and gas industry players appeared to be banking on the discovery of new reserves in the Cook Inlet area, judging from the exploration activity by Forcenergy -- now Forest Oil -- and Unocal. British Petroleum is nearing completion of its gas-to-liquids plant near Nikiski, according to "Situations and Prospects."

Timber sales, at $11.8 million in 1999, fell to just $2 million in 2000, as the availability of harvestable timber declines due largely to the spruce bark beetle infestation, the publication said.

In 2000, the tourist industry saw 5. 3 percent more visitors, but collectively they spent slightly less money -- about 0.8 percent less. Among borough cities, only Seldovia rang up increased sales.

Data in the latest quarterly report update some of the year 2000 information found in Situations and Prospects.

For instance, in the oil and gas industry, the quarterly report noted Forest Oil improved oil production forecasts for its Osprey platform, and the fact that Phillips Petroleum is moving on its exploration near Anchor Point. Increasing demands have led to a revival in the search for gas in the Cook Inlet fields, the report said.

Road improvements, commercial construction -- especially in Kenai and Soldotna -- a $1 million grant to Seward for upgrades to its shipyards and a move to try and bring the 2006 Arctic Winter Games to the peninsula all were tagged as elements of an overall positive economic picture painted by the quarterly report.

In business, gross sales by the end of September were up 8.3 percent over the previous year led by the construction sector. Again, sales outside cities showed the greatest percentage increase. Taxable sales also increased by 4.9 percent boroughwide.

Construction also bounced back in 2001, which may be a measure of the confidence residents and business owners have in the borough economy, Camp said. The value of building permits reached their third highest level since 1986, reaching $31.2 million. Better than 41 percent of that in Kenai. The healthy trend was seen boroughwide, Camp said.

"If the permit is followed through and built, people are employed, sales increase and so sales taxes increase, which means more revenue for government and more money for people," she said. "It (construction) also indicates a positive attitude about the future. If people don't have that positive attitude, they aren't going to be building."

Copies of Situations and Prospects and the Quarterly Report of Key Economic Indicators are available from the borough. They also can be found online at the borough's Web page.



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