The Price Of Oil: Exxon Valdez 20 Years Later

20 years ago today the Exxon Valdez struck Bligh Reef in Prince William Sound just south and east of Valdez, Alaska, the terminus of the TransAlaska Pipeline, spilling some 11,000,000 gallons of oil into the sound and onto the pristine beaches that surround it.

Alaska’s economy was in deep depression from the Oil Price Crash of ’86 and the oil on the Valdez was going to sell for little more than the cost of pumping and transporting it.  I’d been with the State’s division of labor relations about two years and was still sorta the FNG amongst a bunch of people who’d come up through either the State’s HR function or had come over from one of the unions.  We had been embroiled in ugly, contentious concessionary bargaining since Democrat Governor Cowper had announced to the unions, “All bets are off” in the spring of ’87.  The longtime representative of our largest unit, about 8000 general government employees, had been decertified and replaced by AFSCME who had sent a team out from DC to beat us into submission; ugly and contentious got downright mean!  And we had no money.  The unions, especially the new one, desperately wanted a raise and the only way we could give them one was to lay people off.  The policy decision was that there were already too many failed businesses and foreclosed houses in Alaska and we were going to try to keep as many people working as possible.

I heard the news on the way to work but there were few details; PWS was a long way from Juneau back then because communications were so crude.  The State had few employees in Valdez, fewer supervisors, and no managers.  At first we pretty much had to run it from Juneau and, frankly, we didn’t really know what was going on and had no particularly well formed idea what to do anyway.  Depending on the weather it is a four to six hour drive from Anchorage to Valdez or, depending on the plane somewhere between a forty minute and an hour and change flight.  It’s an hour and a half by jet from Juneau to Anchorage or  Cordova then you can catch some smaller plane on to Valdez.  There were no cell phones or sat phones in those days.  Communication was either by landline and satellite relay or by the few radio phones that were around.  At first it might as well have been happening on the dark side of the Moon.  There were spill response plans in place and there had been drills, but it is fair to say that the plans proved inadequate and complacency had taken hold since they’d been operating over ten years without the slightest issue.  The response wasn’t nearly as bad or the industry and State so uncaring as HBO portrayed them in Dead Ahead or as the popular media tried to show – once they figured out where Valdez was and how to get there.  CNN has shown that one oiled otter how many hundreds of thousands of times!  That said, the response was nothing like adequate and neither the State nor the industry covered themselves with glory.  But, it did get cleaned up.  You can still find oil if you lift the right rock, but you can get a good debate about how much of it is from the spill and how much is seepage.  The Copper River Reds are back and are the premier brand of wild salmon.  There’s lots of otters, orcas, and sea birds, though the Greenies won’t tell you that.

The legacy in terms of shipping oil is prepositioned spill response equipment on barges all along the Alaska Coast, powerful tugs in strategic places and escorting each tanker to open water, much improved navigation equipment and aids to navigation including a formal, charted, Traffic Separation Scheme for PWS, something normally only done for the biggest ports.  There are also over a billion dollars worth of new, American – built and crewed double hull tankers and only one single hull tanker remains in the Alaska trade.  It must be retired from the Alaska trade by 2015.  PWS appears to be safe from a spill, but we thought that on March 23, 1989, and I’ve been involved with enough shipwrecks and plane crashes to know that there will always be failures in any human endeavor.

The other legacies are more complex.  The Oil Industry spent over $5 Billion cleaning up the Exxon Valdez spill, that’s almost as much as the TAPS cost to build.  A major contractor in the cleanup was Veco, Inc. which became one of the dominant economic and, especially, political forces in Alaska as the result.  The CPI in Alaska had been flat or negative since ’86.  Governor Cowper had told the unions that when he saw an increase in the CPI, they could have a raise.  There was one in the first or second quarter of ’90 and by that June we had all the unions under contract for the first time since ’86 – my war was over for awhile.  With that war over, I could once again tell female State employees what I did for a living and I met the woman who became my wife while all this was going on.  The five billion breathed life back into the Alaska economy and the gloom that had pervaded the State began to lift.  Somewhere in there the Democrats lost control of the House of Representatives and the Republicans have held it ever since but the Veco scandals of the last couple of years have made the effective margin in the House razor thin and the Senate is now controlled by a coalition for the first time in a very long time.  And, I’m sure CNN is going to show that oiled otter over and over and over today.  Life goes on.  The Lower 48 gets oil, we get money, though not so much these days.  Production is only a little more than a third of what it was in the days before Exxon Valdez.  Alaska has changed dramatically since those days in terms of communication and access and PWS is still a very wild and remote place.