Editing Trans-Alaska Pipeline System (section)

== Impact ==

=== Boomtowns ===
[[File:Fort Wainwright flooding 1967.jpg|thumb|upright|Water overflowed the banks of the [[Chena River]] in August 1967, flooding Fairbanks and [[Fort Wainwright]].]]

Construction of the pipeline caused a massive economic boom in towns up and down the pipeline route. Prior to construction, most residents in towns like Fairbanks—still recovering from the devastating [[History of Fairbanks, Alaska#The Great Flood|1967 Fairbanks Flood]]—strongly supported the pipeline.<ref>Cole, pp. 155–156</ref> By 1976, after the town's residents had endured a spike in crime, overstressed public infrastructure, and an influx of people unfamiliar with Alaska customs, 56 percent said the pipeline had changed Fairbanks for the worse.<ref>Cole, p. 156</ref> The boom was even greater in Valdez, where the population jumped from 1,350 in 1974 to 6,512 by the summer of 1975 and 8,253 in 1976.<ref>Cole, p. 163</ref>

This increase in population caused many adverse effects. Home prices skyrocketed—a home that sold for $40,000 in 1974 was purchased for $80,000 in 1975.<ref>Cole, p. 164</ref> In Valdez, lots of land that sold for $400 in the late 1960s went for $4,000 in 1973, $8,000 in 1974, and $10,000 in 1975.<ref>Cole, pp. 165–166</ref> Home and apartment rentals were correspondingly squeezed upward by the rising prices and the demand from pipeline workers. Two-room log cabins with no plumbing rented for $500 per month.<ref>Cole, p. 168</ref> One two-bedroom home in Fairbanks housed 45 pipeline workers who shared beds on a rotating schedule for $40 per week.<ref>Cole, p. 167</ref> In Valdez, an apartment that rented for $286 per month in December 1974 cost $520 per month in March 1975 and $1,600 per month—plus two mandatory roommates—in April 1975. Hotel rooms were sold out as far away as Glenallen, {{convert|115|mi|km}} north of Valdez.<ref>Cole, p. 169</ref>

The skyrocketing prices were driven by the high salaries paid to pipeline workers, who were eager to spend their money.<ref>Cole, pp. 118–126</ref> The high salaries caused a corresponding demand for higher wages among non-pipeline workers in Alaska. Non-pipeline businesses often could not keep up with the demand for higher wages, and job turnover was high. [[Yellow cab]] in Fairbanks had a turnover rate of 800 percent; a nearby restaurant had a turnover rate of more than 1,000 percent.<ref>Cole, pp. 127–128</ref> Many positions were filled by high school students promoted above their experience level. To meet the demand, a Fairbanks high school ran in two shifts: one in the morning and the other in the afternoon in order to teach students who also worked eight hours per day.<ref>Cole, pp. 129–130</ref> More wages and more people meant higher demand for goods and services. Waiting in line became a fact of life in Fairbanks, and the Fairbanks McDonald's became No. 2 in the world for sales—behind only the recently opened [[Stockholm, Sweden|Stockholm]] store.<ref name="Cole128">Cole, p. 128</ref> Alyeska and its contractors bought in bulk from local stores, causing shortages of everything from cars to tractor parts, water softener salt, batteries and ladders.<ref name="Cole128"/>

The large sums of money being made and spent caused an upsurge in crime and illicit activity in towns along the pipeline route. This was exacerbated by the fact that police officers and state troopers resigned in large groups to become pipeline security guards at wages far in excess of those available in public-sector jobs.<ref>Cole, p. 126</ref> Fairbanks' Second Avenue became a notorious hangout for [[Prostitution|prostitute]]s, and dozens of bars operated throughout town. In 1975, the Fairbanks Police Department estimated between 40 and 175 prostitutes were working in the city of 15,000 people.<ref>Cole, p. 135</ref> Trouble was incited sometimes by prostitutes' [[pimp]]s, who engaged in [[wikt:turf war|turf fights]]. In 1976, police responded to a shootout between warring pimps who wielded [[automatic firearm]]s.<ref name="Cole183">Cole, p. 183</ref> By and large, however, the biggest police issue was the number of drunken brawls and fighting.<ref name="Cole183"/> On the pipeline itself, thievery was a major problem. Poor accounting and record keeping allowed large numbers of tools and large amounts of equipment to be stolen.<ref>Cole, pp. 146–150</ref> The ''[[Los Angeles Times]]'' reported in 1975 that as many as 200 of Alyeska's 1,200 yellow-painted trucks were missing from Alaska and "scattered from Miami to Mexico City". Alyeska denied the problem and said only 20–30 trucks were missing.<ref>Cole, p. 188</ref> The theft problem was typified by pipeliners' practice of mailing empty boxes to pipeline camps. The boxes then would be filled with items and shipped out. After Alyeska ruled that all packages had to be sealed in the presence of a security guard, the number of packages being sent from camps dropped by 75 percent.<ref>Cole, p. 150</ref>

=== Economy of Alaska ===
{{update section|date=May 2024}}
{{main|Economy of Alaska}}
{{see also|Alaska Permanent Fund}}
{{Quote box
 | quote  = The wealth generated by Prudhoe Bay and the other fields on the North Slope since 1977 is worth more than all the fish ever caught, all the furs ever trapped, all the trees chopped down; throw in all the copper, whalebone, natural gas, tin, silver, platinum, and anything else ever extracted from Alaska too. The balance sheet of Alaskan history is simple: One Prudhoe Bay is worth more in real dollars than everything that has been dug out, cut down, caught or killed in Alaska since the beginning of time.<ref name="AJCtransform"/>
 | source = Alaska historian Terrence Cole
 | width  = 33%
 | align  = right
}}

Since the completion of the Trans-Alaska Pipeline System in 1977,<ref name=vcaofo/> the government of the state of Alaska has been reliant on taxes paid by oil producers and shippers. Prior to 1976, Alaska's personal income tax rate was 14.5 percent—the highest in the United States.<ref name="Mead349">Mead, p. 349</ref> The gross state product was $8&nbsp;billion, and Alaskans earned $5 billion in personal income.<ref name="AJCtransform">Fried, Neal. [http://alaskajournal.com/stories/062407/opi_20070624014.shtml "Alaska's economic landscape was transformed by oil"], ''[[Alaska Journal of Commerce]]''. June 24, 2007. Accessed July 28, 2009. {{webarchive |url=https://web.archive.org/web/20071009001411/http://alaskajournal.com/stories/062407/opi_20070624014.shtml |date=October 9, 2007 }}</ref> Thirty years after the pipeline began operating, the state had no personal income tax, the gross state product was $39&nbsp;billion, and Alaskans earned $25&nbsp;billion in personal income.<ref name="AJCtransform"/> Alaska moved from the most heavily taxed state to the most tax-free state.<ref name="Mead349"/><ref>The Tax Foundation. [http://www.taxfoundation.org/taxdata/show/440.html#sl_burden_alaska-20080807 "Alaska's State and Local Tax Burden, 1977–2008"], Tax Data. Accessed July 28, 2009.</ref>

The difference was the Trans-Alaska Pipeline System and the taxes and revenue it brought to Alaska.<ref name="AJCtransform"/> Alyeska and the oil companies injected billions of dollars into the Alaska economy during the construction effort and the years afterward.<ref>Bradner, Tim. [http://alaskajournal.com/stories/062407/foc_20070624001.shtml "Prudhoe Bay: 30 years later"], ''Alaska Journal of Commerce''. June 24, 2007. Accessed July 28, 2009. {{webarchive |url=https://web.archive.org/web/20070713190124/http://alaskajournal.com/stories/062407/foc_20070624001.shtml |date=July 13, 2007 }}</ref> In addition, the taxes paid by those companies altered the tax structure of the state. By 1982, five years after the pipeline started transporting oil, 86.5 percent of Alaska revenue came directly from the petroleum industry.<ref>Naske, p. 272</ref>

The series of taxes levied on oil production in Alaska has changed several times since 1977, but the overall form remains mostly the same.<ref>Gold, Russell and Carlton, Jim. [https://www.wsj.com/articles/SB115534505947234002 "Alaska approves revised law lifting taxes for oil companies"], ''[[Wall Street Journal]]''. August 12, 2006. Accessed July 28, 2009. {{cite web |url=http://online.wsj.com/public/article_print/SB115534505947234002-CODSFcm4d1yfit_tvOaNiR4J374_20070812.html |title=Alaska Approves Revised Law Lifting Taxes for Oil Companies – WSJ.com |access-date=July 29, 2009 |url-status=dead |archive-url=https://web.archive.org/web/20090828105637/http://online.wsj.com/public/article_print/SB115534505947234002-CODSFcm4d1yfit_tvOaNiR4J374_20070812.html |archive-date=August 28, 2009 }}</ref><ref name="latest oil taxes">Bradner, Tim. [http://alaskajournal.com/stories/121107/leg_20071211021.shtml "A Journal overview on the new oil tax bill"], ''Alaska Journal of Commerce''. December 11, 2007. Accessed July 28, 2009. {{webarchive |url=https://web.archive.org/web/20090828072815/http://alaskajournal.com/stories/121107/leg_20071211021.shtml |date=August 28, 2009 }}</ref> Alaska receives royalties from oil production on state land. The state also has a property tax on oil production structures and transportation (pipeline) property—the only state property tax in Alaska. There is a special corporate income tax on petroleum companies, and the state taxes the amount of petroleum produced. This production tax is levied on the cost of oil at Pump Station 1. To calculate this tax, the state takes the market value of the oil, subtracts transportation costs (tanker and pipeline tariffs), subtracts production costs, then multiplies the resulting amount per barrel of oil produced each month. The state then takes a percentage of the dollar figure produced.<ref>Bradner, Tim. [http://alaskajournal.com/stories/091607/og__20070916007.shtml "How Alaska's oil and gas tax system works"], ''Alaska Journal of Commerce''. September 16, 2007. Accessed July 28, 2009. {{webarchive |url=https://web.archive.org/web/20090828072810/http://alaskajournal.com/stories/091607/og__20070916007.shtml |date=August 28, 2009 }}</ref>

Under the latest taxation system, introduced by former governor [[Sarah Palin]] in 2007 and passed by the Alaska Legislature that year, the maximum tax rate on profits is 50 percent. The rate fluctuates based on the cost of oil, with lower prices incurring lower tax rates.<ref name="latest oil taxes"/> The state also claims 12.5 percent of all oil produced in the state. This "royalty oil" is not taxed but is sold back to the oil companies, generating additional revenue.<ref name="Human">Alaska Humanities Forum. [http://www.akhistorycourse.org/articles/article.php?artID=257 "Modern Alaska: Alaska Permanent Fund"] {{Webarchive|url=https://web.archive.org/web/20160303230349/http://www.akhistorycourse.org/articles/article.php?artID=257 |date=March 3, 2016 }}, akhistorycourse.org. Accessed July 28, 2009.</ref> At a local level, the pipeline owners pay property taxes on the portions of the pipeline and the pipeline facilities that lay within districts that impose a property tax. This property tax is based on the pipeline's value (as assessed by the state) and the local property tax rate. In the [[Fairbanks North Star Borough]], for example, pipeline owners paid $9.2 million in property taxes—approximately 10 percent of all property taxes paid in the borough.<ref>Editorial. "Pipeline payments", ''[[Fairbanks Daily News-Miner]]''. June 21, 2009. Accessed July 28, 2009.</ref>

[[File:Alaska Crude Oil Production.PNG|thumb|left|Alaska oil production peaked in 1988.]]

The enormous amount of public revenue created by the pipeline provoked debates about what to do with the windfall. The record $900 million created by the Prudhoe Bay oil lease sale took place at a time when the entire state budget was less than $118 million,<ref name="Mead349"/> yet the entire amount created by the sale was used up by 1975.<ref>Mead, p. 350</ref> Taxes on the pipeline and oil carried by it promised to bring even more money into state coffers. To ensure that oil revenue wasn't spent as it came in, the Alaska Legislature and governor [[Jay Hammond]] proposed the creation of an [[Alaska Permanent Fund]]—a long-term savings account for the state.<ref>Alan Austerman. {{usurped|1=[https://web.archive.org/web/20090828062510/http://www.akrepublicans.org/pastlegs/opedausterman105051999.htm "Alaska Permanent Fund history recapped"]}}, akrepublicans.org. May 5, 1999. Accessed July 28, 2009.</ref> This measure required a constitutional amendment, which was duly passed in November 1976. The amendment requires at least 25 percent of mineral extraction revenue to be deposited in the Permanent Fund.<ref>Alaska Permanent Fund Corporation. [http://www.apfc.org/home/Content/fundlaw/constAndLaw.cfm "Alaska constitution and law pertaining to the Permanent Fund"], apfc.org. Accessed July 28, 2009. {{webarchive |url=https://web.archive.org/web/20090415083955/http://www.apfc.org/home/Content/fundlaw/constAndLaw.cfm |date=April 15, 2009 }}</ref> On February 28, 1977, the first deposit—$734,000—was put into the Permanent Fund. That deposit and subsequent ones were invested entirely in bonds, but debates quickly arose about the style of investments and what they should be used for.<ref>Alaska Permanent Fund Corporation. [http://www.apfc.org/home/Content/reportspublications/fundHistoryA.cfm "Landmarks in Permanent Fund history: 1968–1977 period"], apfc.org. Accessed July 28, 2009. {{webarchive |url=https://web.archive.org/web/20090828065122/http://www.apfc.org/home/Content/reportspublications/fundHistoryA.cfm |date=August 28, 2009 }}</ref>

In 1980, the Alaska Legislature created the Alaska Permanent Fund Corporation to manage the investments of the Permanent Fund, and it passed the Permanent Fund Dividend program, which provided for annual payments to Alaskans from the interest earned by the fund. After two years of legal arguments about who should be eligible for payments, the first checks were distributed to Alaskans.<ref>Alaska Permanent Fund Corporation. [http://www.apfc.org/home/Content/reportspublications/fundHistoryB.cfm "Landmarks in Permanent Fund history: 1980–1990 period"], apfc.org. Accessed July 28, 2009. {{webarchive |url=https://web.archive.org/web/20090828065127/http://www.apfc.org/home/Content/reportspublications/fundHistoryB.cfm |date=August 28, 2009 }}</ref> After peaking at more than $40 billion in 2007, the fund's value declined to approximately $26 billion as of summer 2009.<ref>Alaska Permanent Fund Corporation. [http://www.apfc.org/home/Content/reportspublications/fundHistoryD.cfm "Landmarks in Permanent Fund history: 2002–present"], apfc.org. Accessed July 28, 2009. {{webarchive |url=https://web.archive.org/web/20090828065143/http://www.apfc.org/home/Content/reportspublications/fundHistoryD.cfm |date=August 28, 2009 }}</ref> In addition to the Permanent Fund, the state also maintains the [[Alaska Permanent Fund#Constitutional Budget Reserve (CBR)|Constitutional Budget Reserve]], a separate savings account established in 1990 after a legal dispute over pipeline tariffs generated a one-time payment of more than $1.5 billion from the oil companies.<ref>Loy, Wesley. [http://www.adn.com/news/government/story/671129.html "Alaska budget reserve suffers billion-dollar loss"], [[Anchorage Daily News]]. January 28, 2009. Accessed July 28, 2009. {{webarchive |url=https://web.archive.org/web/20090605232213/http://www.adn.com/news/government/story/671129.html |date=June 5, 2009 }}</ref> The Constitutional Budget reserve is run similar to the Permanent Fund, but money from it can be withdrawn to pay for the state's annual budget, unlike the Permanent Fund.<ref name="Human"/>

=== Oil prices ===
[[File:Nominalrealoilprices.gif|thumb|Nominal and Real Price of Oil, 1971–2007]]
Although the Trans-Alaska Pipeline System began pumping oil in 1977,<ref name=vcaofo/> it did not have a major immediate impact on global oil prices.<ref name="oil prices"/> This is partly because it took several years to reach full production and partly because U.S. production outside Alaska declined until the mid-1980s.<ref>[[American Petroleum Institute]]. [http://www.api.org/aboutoilgas/sectors/explore/historyofnorthalaska.cfm "History of Northern Alaska Petroleum Development"], API.org. Accessed July 29, 2009.</ref> The [[Iranian Revolution]] and OPEC price increases triggered the [[1979 energy crisis]] despite TAPS production increases. Oil prices remained high until the late 1980s,<ref name="oil prices">Energy Information Administration. [http://www.eia.doe.gov/emeu/aer/txt/ptb1107.html "Crude Oil Prices by Selected Type, 1970–2009"], EIA.doe.gov. Accessed July 29, 2009.</ref> when a stable international situation, the removal of price controls, and the peak of production at Prudhoe Bay contributed to the [[1980s oil glut]]. In 1988, TAPS was delivering 25 percent of all U.S. oil production. As North Slope oil production declined, so did TAPS's share of U.S. production. Today, TAPS provides less than 17 percent of U.S. oil production.<ref>National Energy Technology Laboratory. [http://www.netl.doe.gov/technologies/oil-gas/AEO/FossilEnergy/AlaskaOilHistory.html "Fossil Energy – Alaska Oil History"] {{webarchive |url=https://web.archive.org/web/20090425181532/http://www.netl.doe.gov/technologies/oil-gas/AEO/FossilEnergy/AlaskaOilHistory.html |date=April 25, 2009 }}, Arctic Energy Office. Accessed July 29, 2009.</ref>

=== Social impact ===
The pipeline attracts tens of thousands of visitors annually on pipeline tourism trips.<ref>Cole, p. 199</ref> Notable visitors have included [[Henry Kissinger]],<ref name="Cole85">Cole, p. 85</ref> [[Jamie Farr]],<ref name="Cole85"/> [[John Denver]],<ref name="Cole85"/> President [[Gerald Ford]],<ref name="Cole85"/> King [[Olav V of Norway]],<ref>Cole, p. 87</ref> and [[Gladys Knight]]. Knight starred in one of two movies about the pipeline construction, ''[[Pipe Dreams (1976 film)|Pipe Dreams]]'' and ''[[Joyride (1977 film)|Joyride]]'', both were critically panned.<ref>Cole, p. 86</ref> Other films, such as ''[[On Deadly Ground]]'' and ''[[30 Days of Night (film)|30 Days of Night]]'', refer to the pipeline or use it as a plot device.<ref>The Internet Movie Database. [https://www.imdb.com/title/tt0110725/plotsummary "Plot summary for ''On Deadly Ground''"], [[IMDb]], Accessed July 29, 2009.</ref><ref>The Internet Movie Database. [https://www.imdb.com/title/tt0389722/synopsis "Synopsis for ''30 Days of Night''"], IMDb, Accessed July 29, 2009.</ref>

The [[Alistair Maclean]] novel, "Athabasca", published 1980, also deals with a sabotage threat against both the Alaska Pipeline and the Athabasca tar sands in Canada.<ref>{{Cite book |title=Athabasca |last=MacLean |first=Alistair |isbn=0-449-24429-6}}</ref>

The pipeline has also inspired various forms of artwork. The most notable form of art unique to the pipeline are pipeline maps—portions of scrap pipe cut into the shape of Alaska with a piece of metal delineating the path of the pipeline through the map.<ref>Wickware, p. 80</ref> Pipeline maps were frequently created by welders working on the pipeline, and the maps were frequently sold to tourists or given away as gifts.<ref>Wickware, pp. 80–81</ref> Other pipeline-inspired pieces of art include objects containing crude oil that has been transported through the pipeline.<ref>Wickware, p. 81</ref>