It has cost mankind much blood, sweat and money to push civilization this close to the North Pole. With new sewers and housing due to be built this year, Fairbanks seems unwilling to let the latest oil crisis push the city off its frozen, gritty plateau.
Oil-rich regions of the lower 48 states, such as Texas and Louisiana, have verged on panic as petroleum prices fell to $10 a barrel before climbing slightly. Alaskans are equally dependent on oil, but this Arctic metropolis appears to have committed itself too deeply to its hostile environment to back out on short notice.
Major oil companies have calculated that shutting down wells along the Arctic Ocean at Prudhoe Bay would be too expensive, particularly after they add the potential costs of starting up again when times improve, University of Alaska economist Otis Gilley said.
While the wells keep pumping, the state legislature in Juneau has accelerated budget cuts, and Fairbanks Mayor Bill Walley is talking about higher local taxes. But Alaskans have become used to occasional lean times and have built up a cushion to ride this one out. Beyond that, they are looking to tourism -- and, in Fairbanks, to the arrival of a new light infantry brigade -- to keep the economy off the ropes.
"We had a wonderful time spending all that money," said Jan Faiks, cochairman of the state Senate Finance Committee. Oil-supported state spending multiplied four times in the last nine years of oil revenues, she said, but "the Alaskan economy has been cyclical since 1890, and the Alaskan spirit is, 'Okay, this is one of those little downturns for a couple years.' "
The University of Alaska's main campus here has announced a cut of 92 faculty and staff positions. A recent ARCO Alaska Inc. decision to halve exploratory oil drilling has meant lost jobs for about 400 construction workers. But business people such as George L. Whyel Jr., president of the First National Bank of Fairbanks, say long-planned government projects and bustling tourism will pick up some slack while the oil industry waits to see where the price of crude settles.
Meanwhile, Faiks said, "The local communities are all cooperating very much, providing us with information on their services." Teachers appear to have moderated contract demands, and the representatives of the 9,500-member Alaska Public Employes Association seem close to accepting a delay of a 3.8 percent pay increase.
But the talk is not only of belt-tightening. Faiks said the state has managed to save 23 percent of its oil largess, much going to the $6 billion Permanent Fund that legislators hope to keep for the years when the oil wells run dry. That enormous savings account will pay each Alaska resident a $504 cash dividend in interest this year, no matter what happens to petroleum prices. With such solid state credit, the Alaska Housing Finance Corp. recently acquired investor backing for home mortgages as low as 9.25 percent.
Fairbanks also is anticipating an influx of more than 2,800 soldiers and 3,500 dependents, who will need houses, groceries and school shoes. Rather than cut back its presence here in the face of the federal budget crisis, the Pentagon is about to install a brigade of the new 6th Light Infantry Division, in part to protect the pipeline that takes Alaskan oil south.
A major upgrading of water and sewer lines has begun. The Army has put one local firm to work building 400 housing units, the first step in what is expected to be at least $300 million in construction.
The brigade, to be split between Fort Wainwright at the southeast corner of Fairbanks and Fort Richardson in Anchorage, is the only one of the Army's new mobile divisions with a specific turf to defend. Its assignment, said Army spokesman Maj. Philip Soucy, "most assuredly" includes the Trans-Alaska Pipeline, a gleaming metal snake slicing south along Fairbanks' eastern border.
Economist Gilley, a distant cousin of country singer and Pasadena, Tex., nightclub owner Mickey Gilley, moved here last summer from Austin, Tex. A huge map of the Lone Star State dominates his tiny office overlooking a typical Alaska university quadrangle -- mud, old snow and gravel. Alaskans have taken the oil glut more calmly than have his fellow Texans, he said, because the major oil companies, which move slowly and carefully, dominate this economy. Texas and Louisiana, on the other hand, are full of smaller, independent companies operating in a milder climate that permits quick changes of plan.
Mayor Walley points out that his constituents take most things calmly during a Fairbanks winter, 100 miles south of the Arctic Circle. Life slows as subzero temperatures and long nights settle over this flat metropolitan region of low buildings, leafless trees and 70,000 people. Tourist agents, hunting guides, construction workers and truckers often hole up with the summer's earnings until the snow melts and the days lengthen, as they are beginning to do.
Walley, owner of radio station KFAR-AM and a Democratic candidate for governor, notes that city residents have not had much time to worry about their next jobs. Whyel, the banker, says many of those emerging from hibernation, eyeing the small construction boom, have had jobs lined up for months.
Nonetheless, Gilley's students tell him they harbor some worries about the oil price drop. "A lot of them are concerned that their loan programs might be cut back," he said; many local students who look forward to careers near home "are beginning to wonder if that is a real viable possibility." But Gilley predicted, "This area is going to continue to grow at a moderate pace for a considerable period of time."
Scott Hawkins, corporate economist for the Alaska Pacific Bank in Anchorage, said the oil price drop does have elements of "everybody's worst nightmare," and he has detected some nervousness on the part of investors previously interested in the state. "But the long-term prospects are not as dismal as people are projecting," he said.
"It will probably be like the post-pipeline recession," said Hawkins, referring to a temporary drop in sales and employment after the pipeline was completed in 1977. "By Lower-48 standards, it will be less severe than the Rust Belt recession in the Midwest, perhaps more comparable to the forest products recession in the Northwest, though not as prolonged."
A series of windfall court decisions and tax settlements totaling $1 billion have eased the relative impact of even the major cuts contemplated in Juneau. Faiks said she expects the state to remove 500 employes at most from the more than 16,000 on the state payroll.
At Holland America Line-Westours Inc. in Anchorage, agents can barely restrain their enthusiasm for what seems certain to be a record year for visitors to Alaska. Oil money spent last year blanketed Los Angeles and other major U.S. markets with lyrical television commercials softly beckoning tourists north to see glaciers and flocks of eagles.
Westours records show bookings for its cruises up the coast running 20 percent to 30 percent ahead of last year. Expo '86, Vancouver's world's fair, is expected to bring many people to Alaska's front door. New U.S. rules allowing long Anchorage stopovers on transcontinental air trips should encourage Japanese tourists, said Mark Gregg, Westours assistant sales manager.
The happiest merchants in this area can be found 15 miles south of Fairbanks in the little suburb of North Pole, which earned a good living from its lakes, camp sites and unusual name even before the pipeline came through. Visitors love to buy Christmas gifts or send cards and letters with the North Pole postmark from Santa Claus House in the middle of town.
Unlike Santa, "a lot of people are afraid of flying overseas this year," Mayor Carleta Lewis said. "It looks like it's going to be a really good year for us."