Oil Pipeline Crisis Forces Alaska State Hiring Freeze

Alaska Governor Frank H. Murkowski has instituted an immediate hiring freeze for the state government because of the several million dollars Alaska is losing in taxes and royalties every day resulting from BP’s decision to shut down the Prudhoe Bay oil field to stem pipeline corrosion.

BP has since announced plans to keep the Western half of the oil field online, which will allow it to produce 200,000 barrels per day, or about half its pre-shutdown capacity, by the end of the month.

“Alaska has had a wake-up call,” Murkowski said in a statement about the ongoing crisis. “With 86 percent of our revenues coming from oil taxes, we are vulnerable to any decline in production.”

The Alaska governor added: “The attorney general will review the state’s legal rights and determine an appropriate course of action to protect the state’s interests, including the state’s right to hold BP fully accountable for losses to the state.”

In addition to instituting the immediate hiring freeze on state workers, Murkowski has asked the federal Office of Management and Budget to ready a management plan to protect vital state services during the oil field shutdown.

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The hiring freeze covers the principal departments of the executive branch of state government, and is patterned after a hiring freeze put in place immediately after Governor Murkowski took office in December 2002, when the state faced an $800 million budget deficit. At that time, the hiring freeze covered only exempt and partially exempt employees; however, the current freeze also covers employees in the classified service.

The current hiring freeze does not apply to positions critical to protect the public’s health and safety, such as state troopers and correctional officers, or to positions that provide patient and residential care in 24-hour facilities.

The state estimates the loss of Prudhoe Bay’s daily production of 400,000 barrels of oil means a drop in $6.4 million per day in state revenue. If BP can produce half of the pipeline’s capacity by the end of August, the state will realize a less severe loss of tax and royalty income.