President Barack Obama is visiting the state that oil built Monday. He’ll spend three days in Alaska focusing on the effects of climate change. A lot of those effects are most pronounced in the arctic and come from burning oil and fossil fuels. However, reducing the use of oil is a hard sell in a state that’s so dependent on drilling and transporting it.
In Alaska, 90 percent of the state budget relies on oil, and about a third of jobs can be traced back directly to petroleum, but the state is in some economic trouble. Alaska’s government assumed that oil would be selling for $105 a barrel this year, but it’s currently selling for $40 a barrel. That leaves the state with a big deficit problem.
A long-term problem is that oil production has fallen to a quarter of what it was in the 1970s. If the Trans-Alaskan pipeline flow gets too low, the oil has to be warmed up. This costs the state money and perpetuates a negative cycle.
“Warming melts the ice, which leads to more drilling, which leads to more warming,” says Marketplace’s Scott Tong.
Marketplace is on a mission.
We believe Main Street matters as much as Wall Street, economic news is made relevant and real through human stories, and a touch of humor helps enliven topics you might typically find…well, dull.
Through the signature style that only Marketplace can deliver, we’re on a mission to raise the economic intelligence of the country—but we don’t do it alone. We count on listeners and readers like you to keep this public service free and accessible to all. Will you become a partner in our mission today?