Arctic Economics

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.  

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:

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.

King Island and the Great Sickness: the Terrible Summer of 1900

In the summer of 1900 King Island was hit hard by disease.  R. Newton Hawley, surgeon on the U.S. Revenue Cutter Bear, visited the island in July and again in August and published a short account in 1901 (The World's Work, search for "Arctic Cliff Dwellers").

The Bear off Cape Romantzoff in early June, 1900.  About a month before she reached King Island.  Source: U.S. Coast Guard Historian’s Office.  

King Island and the American fur traders

Americans began trading in the Pacific in the 1780s. Trade was interrupted by Jefferson’s embargo and the War of 1812, but subsequently small American ships crisscrossed the ocean with cargoes of furs from the Pacific Northwest, sandalwood from Hawaii, copper from Chile, ginseng from the U.S. Appalachian Mountains, and silk and tea from China (Old China Trade).

Far to the north, beyond the Aleutian Islands and the Bering Sea, Eskimos, Chukchis, and Russians traded across the Bering Strait. Furs from America moved west, in exchange for glass beads and iron. Coastal and island Eskimos were active intermediaries.

Briefly, in 1819 and 1820, Americans from the Pacific tested the waters in the Bering Straits: two American brigs, the General San Martin and the Pedlar, explored regional trading opportunities. King Island flits into sight in journals and reports of these visits.

King Island, 1880

In April 2008 I posted on a visit to King Island by the U.S. Revenue Cutter Corwin in 1881 (A Visit to King Island, July 12, 1881). 

The Corwin, under Captain Calvin Hooper, also visited in 1880.  Hooper's report was published in 1881: Report of the Cruise of the U.S. Revenue-Steamer Corwin in the Arctic Ocean .

Hooper supplied his own illustrations - here's his picture of King Island from about four miles to the south:

 

Hooper's description:

New U.S. Arctic Fishery Management Plan

Area covered by the new Arctic Fishery Management Plan Source: Council's Draft Arctic FMP.

On Thursday, the North Pacific Fishery Management Council voted to adopt a Fishery Management Plan for the Arctic.  There's currently some limited commercial and subsistence fishing managed by Alaska in her state marine and internal waters, but none, or no more than trivial amounts incidental to the state fisheries, in Federal waters (starting three miles offshore).  Moreover, there is probably little or no current interest in fishing in Federal Arctic waters.

The new plan effectively prohibits commercial fishing in Federal waters for now, and creates mechanisms to ensure that if there is interest in the future, any fishing develops in a way that takes account of the impacts on fish stocks and on other parts of the ecosystem.

Wesley Loy of the Anchorage Daily News reports here: Council Outlaws Arctic Fisheries.  Here's the draft Fishery Management Plan: Fishery Management Plan for Fish Resources of the Arctic Management Area, and here's the analysis.

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