Boomtowns 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
1967 Fairbanks Flood—strongly supported the pipeline. 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. 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. 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. 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. 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. One two-bedroom home in Fairbanks housed 45 pipeline workers who shared beds on a rotating schedule for $40 per week. 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, north of Valdez. The skyrocketing prices were driven by the high salaries paid to pipeline workers, who were eager to spend their money. 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 cabs in Fairbanks had a turnover rate of 800 percent; a nearby restaurant had a turnover rate of more than 1,000 percent. 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. 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 store. 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. Fairbanks' Second Avenue became a notorious hangout for
prostitutes, 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. Trouble was incited sometimes by prostitutes'
pimps, who engaged in
turf fights. In 1976, police responded to a shootout between warring pimps who wielded
automatic firearms. By and large, however, the biggest police issue was the number of drunken brawls and fighting. 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. 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.
Economy of Alaska Since the completion of the Trans-Alaska Pipeline System in 1977, The gross state product was $8 billion, and Alaskans earned $5 billion in personal income. Thirty years after the pipeline began operating, the state had no personal income tax, the gross state product was $39 billion, and Alaskans earned $25 billion in personal income. The difference was the Trans-Alaska Pipeline System and the taxes and revenue it brought to Alaska. 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. The series of taxes levied on oil production in Alaska has changed several times since 1977, but the overall form remains mostly the same. 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. 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. 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. 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, 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. 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. 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. 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. After peaking at more than $40 billion in 2007, the fund's value declined to approximately $26 billion as of summer 2009. In addition to the Permanent Fund, the state also maintains the
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. 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. The
Iranian Revolution and OPEC price increases triggered the
1979 energy crisis despite TAPS production increases. Oil prices remained high until the late 1980s, 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.
Social impact The pipeline attracts tens of thousands of visitors annually on pipeline tourism trips. Notable visitors have included
Henry Kissinger,
Jamie Farr, and
Gladys Knight. Knight starred in one of two movies about the pipeline construction,
Pipe Dreams and
Joyride, both were critically panned. Other films, such as
On Deadly Ground and
30 Days of Night, refer to the pipeline or use it as a plot device. 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. 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. Pipeline maps were frequently created by welders working on the pipeline, and the maps were frequently sold to tourists or given away as gifts. Other pipeline-inspired pieces of art include objects containing crude oil that has been transported through the pipeline. == Technical details ==