Investments in North Slope oil and gas projects will be the main driver behind statewide construction spending growth in the coming year, according to a report by the University of Alaska Anchorage Institute of Social and Economic Research.
The annual forecast projects oil and gas spending on construction work in the state to total $4.3 billion in 2014, up 34 percent from $3.2 billion last year. That sector accounts for 46 percent of all construction spending in the state, estimated to be about $9.2 billion.
Last year’s initial projection of $8.4 billion was revised to $7.8 billion after oil and gas spending lagged behind expectations in 2013, setting up an even larger increase in anticipated spending this year.
The overall construction spending forecast of $9.2 billion is an 18 percent increase versus 2013.
“An 18 percent increase over last year — it’s pretty amazing. I think we can attribute most of that to SB 21,” the oil tax reform legislation signed by Gov. Sean Parnell last spring, Associated General Contractors of Alaska Executive Director John MacKinnon said.
The “More Alaska Production Act,” touted by Parnell and Republican legislators as a way to spur investment in the state by oil producers, went into effect Jan. 1. Opponents to the tax structure change got Proposition 1, a referendum to repeal the law, on the August primary ballot after a successful petition campaign.