Arctic Economics

Russian oil tankers bump into each other on the Northeast Passage

Two Russian oil tankers transiting the Northeast Passage evidently collided on the night of July 16 near the New Siberian Islands.  No one was hurt, and none of the diesel fuel they carried was spilled: Collision was ’just a situation’.

For more background, see (a) Arctic oil tankers collided and (b) Oil tankers through Northeast Passage.

The Arctic's evitable gas industry

There's a lot of natural gas in the Arctic: maybe 30% of the world's undiscovered natural gas resources.  But the value of those resources, and the likelihood of development, depends on the availability of substitutes. 

Unfortunately for Arctic jurisdictions hoping to cash in on their resources, there's been a big increase in the availability of substitutes recently.  The Economist has an overview this week: Natural gas, An unconventional glut.  

China's Interest in the Arctic

Linda Jakobson of the Stockholm International Peace Research Institute reports that potential Arctic sea routes to New York and Europe have attracted the attention of the Chinese: China prepares for an ice-free Arctic:

Because China’s economy is reliant on foreign trade, there are substantial commercial implications if shipping routes are shortened during the summer months each year. Nearly half of China’s gross domestic product (GDP) is thought to be dependent on shipping. The trip from Shanghai to Hamburg via the Northern Sea Route—which runs along the north coast of Russia from the Bering Strait in the east to Novaya Zemlya in the west—is 6400 kilometres shorter than the route via the Strait of Malacca and the Suez Canal... Moreover, due to piracy, the cost of insurance for ships travelling via the Gulf of Aden towards the Suez Canal increased more than tenfold between September 2008 and March 2009.

Tokyo to London by fiber-optic cable

Khanjee Holdings Inc. and the Kodiak-Kenai Cable Company (owned by the Alaska Native Corporations Old Harbor Native Corp. and the Ouzinkie Native Corp.) want to build a fiber-optic cable from Tokyo to London by way of the Arctic Ocean: Arctic fiber-optic cable could benefit far-flung Alaskans (Elizabeth Bluemink, Anchorage Daily News).  Boosters say the $1 billion project could cut data transmission time from Japan to the U.K. in half.  The shrinking Arctic ice cover is creating this opportunity.

Plans call for two connections with Alaska - in Dutch Harbor and in Prudhoe Bay.  Cable access could have a big impact in rural Alaska:

...it could provide high-speed, reliable Internet to Bethel, Kotzebue, Nome and other communities. In the future, the network could be expanded to bring broadband Internet to 142 villages...

For now, most rural Alaska communities rely on satellite-based Internet, which is expensive and sometimes transmits data to households and businesses even more slowly than a dial-up Internet connection....

She [Denise Michels, Mayor of Nome - Ben] said high-speed Internet could create a lot of economic opportunities in her town and improved communication between local doctors and national medical experts. "

Developers are looking for $350 million in loans and grants from U.S. stimulus funding.

Was Alaska Worth It?

Mounties marching in Juneau, Alaska.  Alaska might have been Canadian if Seward hadn't acted.

Did we get our money's worth when we bought Alaska from the Russians?

It only cost $7.2 million in 1867, but David Barker wonders if the U.S. taxpayers might have been better off without it: Was the Alaska Purchase a Good Deal?

Alaska's gold production is up

Elizabeth Bluemink reports: Alaskan Gold production highest since 1916 (Anchorage Daily News,  November 8, 2009). 

 

Fort Knox mine.  Source: Kinross Gold Corporation.

In  summary:

Alaska produced about 800,000 ounces of gold in 2008 - the largest amount since 1916 ( High as that output is, Alaska currently only accounts for ten percent of U.S. gold production).  Almost all, about 84 percent, came from two mines - the open pit Fort Knox mine near Fairbanks, and the underground Pogo mine near Delta Junction.  About five percent of the gold came from small scale placer mining.

It's getting relatively more expensive to live in rural Alaska

The cost of living differential between urban and rural Alaska has increased since 1985 - an important reason is the introduction of "big box stores" in urban Alaska. 

Pat Forgery has a nice piece in today's Alaska Empire summarizing testimony to the Alaska House Finance Committee by McDowell Group economist Jim Calvin: Urban, rural cost divide widens.  The McDowell Group was hired by the state to look at regional cost-of-living differentials.  This study will be used in labor negotiations.

In summary:

Art and Subsistence at Cape Dorset

Eric Crampton's elegant post on the origins of Inuit print-making at Cape Dorset in Canada: 50 years of Cape Dorset prints . 

His theme is the impetus cross-cultural contact can give to creativity.  There are useful links to a newspaper story on Cape Dorset (on Baffin Island) and on the way its subsistence and artistic economies coexist and complement each other, and to a debate between Tyler Cowen of George Mason and Benjamin Barber of the University of Maryland about what globalization does to culture.

All this, and pretty pictures too.

King Island and the Russian Fur Traders, 1822

When westerners began to visit the Bering Strait, they were touching the jugular of a thriving trade in furs between America and Asia. 

Furs from central and northern Alaska, and from as far east as Canada's Mackenzie River drainage, made their way west, from one set of hands to another, through a network of Native fur traders.  The furs were funneled through the Bering Strait, made their way across Chukotka and Siberia, to Russian and Cossack traders, southeast down the Lena River, across and around Lake Baikal, and into China.  On the backhaul blue beads, tobacco, knives, axe heads, and iron ware, made their way east.

King Island was just south of the Strait, and King Islanders were active middlemen in this trade.

John Bockstoce, the historian of the northern whaling industry, has a new book out on the 19th Century northern fur trade: Furs and Frontiers in the Far North.  In Furs and Frontiers he describes a visit by Russian explorer/traders to King Island in 1822.

The Russian-American Company probed north into the Bering Sea and the Bering Strait from its bases on Alaska's Pacific coast, looking for ways to intercept the trade and its profits.  In 1822Vasily Stepanovich Khramchenko was sent north in the brig Golovnin to survey Norton Sound and the Bering Strait.

Where is the Beaufort Sea boundary between the U.S. and Canada?

The U.S. Secretary of Commerce approved the North Pacific Fishery Management Council's new Arctic Fishery Management Plan last week.  The plan defers commercial fishing until there is more information about the fish stocks and possible social and ecosystem impacts.

It's also drawn attention to a border dispute between the U.S. and Canada. 

The Canadian's think their Beaufort Sea boundary with the U.S. is a linear extension of the national boundaries on the adjacent mainland - the U.S. thinks the boundary starts out at a 90 degree angle to the shoreline.  The map above shows the disputed area.