ISER releases 2013 Alaska Construction Spending Forecast

The estimated value of construction spending in Alaska in 2013 will be about $8.4 billion, up 8 percent from spending in 2012. That's according to the 2013 Alaska Construction Spending Forecast, prepared by Scott Goldsmith and Mouhcine Guettabi of ISER for the Associated General Contractors of Alaska and released as part of ISER's Research Matters series. The forecast also finds:

• More spending in the oil and gas sector will account for most of the growth. That spending is expected to be up about 13 percent, from $3.2 billion last year to $3.6 billion in 2013. Growth will be driven by the continuing high prices of oil and gas, increasing costs in all phases of oil and gas operations, growing need to maintain the aging infrastructure and facilities on the North Slope and in Cook Inlet and tax credits available to companies as part of ACES (Alaska's Clear and Equitable Share) production tax.
• A large state capital budget for fiscal year 2013 will also add to growth and offset a big drop in military construction spending.
• Spending for education facilities, highways and roads, and ports and harbors will also be up sharply in 2013, due to a combination of state capital grants and $453 million in general obligation bonds that voters approved for transportation projects in the November 2012 election.
• There is some uncertainty in the forecast every year. Adding to uncertainty this year is "sequestration," looming automatic federal budget cuts. If Congress allows those cuts to go into effect, some planned federal spending in Alaska could be postponed or eliminated. Also, we assume that the oil and gas sector will generally move forward with announced plans, but those plans can be affected by unforeseen factors, including weather, logistics, regulatory and legal challenges, prices and operational and strategic concerns.

If you have questions, get in touch with Scott Goldsmith at osgoldsmith@uaa.alaska.edu or (907) 786-7710.