by Brian Bahouth
The crash in crude oil prices spelled a horrific and ongoing budget crisis for the Alaska state government. In the span of 2 years the price of oil free fell from $100 a barrel to a low of $26, and oil production in Alaska has dropped to a quarter of its output 25 years ago. Over the past decade the state has relied on revenue from oil and gas to underwrite more than 90% of the state’s budget.
This steep downturn in industrial activity also harpooned freight traffic revenue on the state owned, Alaska Railroad.
The vast and essential railway runs from the port city of Seward, 470 miles north to Fairbanks, and oil patch freight is one of three primary lines of revenue, along with passengers and real estate.
On the 20th of October, at 7:30 AM, Bill O’Leary, President of the Alaska Railroad Corporation, gave a talk as part of the Alaska Resource Development Council Breakfast Forum in the Dena’ina Center, Anchorage.
The Resource Council is a business association made up of individuals and companies from Alaska’s oil and gas, mining, forest products, tourism and fisheries industries.
Even though the rail line is state owned, Bill O’Leary told the group he runs the system like a for-profit business and is working to expand the lease of railroad lands, an aspect of the operation that helps stabilize revenue against the brutal vagaries of a natural resource based economy; and as part of his effort to find new lessees, especially around Fairbanks, Anchorage and Seward, he noted the legal marijuana industry as a likely and well-suited customer … a potentially tricky proclamation for a railroad president, but Mr. O’Leary used humor to introduce cannabis as a viable and important industry sector …