Economic Significance of the Alaska Railroad

Abstract

This report estimates the economic effects of Alaska Railroad spending in Alaska, for both operations and capital projects. The Alaska Railroad is a major part of the transportation network in Alaska and also between Alaska and the Lower 48. It connects with rail service from the rest of the U. S. and Canada via its port facilities in Whittier and ships coal and naphtha to Asia via the port of Seward. The railroad carries both passengers and freight, but it is freight that accounts for most of the railroad’s operating revenue. It carries large volumes of a variety of freight. In recent years, petroleum products the railroad hauls from the North Pole refinery to the Anchorage area have made up much of its freight volume. For many years it carried several hundred thousand tons of coal per year between Healy and Seward, for export to Korea, and it continues to haul coal from Healy to Fairbanks. It also hauls a significant portion of the gravel used in the Anchorage bowl from the Mat-Su Valley. The railroad is able to carry these large volumes of freight more efficiently and at lower cost than trucks—and so it facilitates current economic activity and can help make future developments feasible. Our estimates of the economic effects of railroad spending in Alaska are based on annual average spending of $108 million from 2001 through 2003. If railroad spending increased, it would support more jobs and income; if spending dropped, it would cost the state jobs and income.