Despite a pro-business governor, a treasure-trove of natural resources and a budget surplus, Alaska ranks near the bottom in two recent surveys of places to do business. We know how great it is to work, live and play here, so we find such rankings frustrating. However, objective observers are telling us that our economic house is not in order, and they are telling us what needs improvement.

The annual CNBC survey of “America’s Top States for Business” puts Alaska in 49th place. Last year we were 50th, and this year our huge oil tax surplus helped move us ahead of Rhode Island.

The study looked at the basic indicators of economic health and growth, including fiscal health, which was calculated by examining projected budget gaps (or surpluses) for the coming fiscal year. Even this bright spot was somewhat dimmed by learning that North Dakota and Wyoming beat us in this category – both with oil taxes orders of magnitude lower than Alaska’s.

We flunked most of the other categories: 49th in cost of doing business, 48th in workforce, 43rd in technology and innovation, 41st in education, 49th in cost of living. We got slightly better grades in access to capital, 35th, and business friendliness, 34th.. The one category where we usually think we don’t stack up – what I call the “cold and dark” measure - we proved ourselves competitive in the middle of the pack at 21st.

But wait, there’s more!

A recent report issued by the Fraser Institute, a well-respected Canadian research organization, ranked locations in terms of their favorability to oil and gas development. Alaska’s scores went from bad last year to dismal this year, falling behind 21 oil regions.

While Alaska only ranked in the third quintile, other U.S. states dominated the top quintile, with eight of the top 10 spots going to U.S. states: Mississippi, Ohio and Kansas taking the top three spots.

Meantime, Alaska offshore plunged from 57th to 78th and Alaska onshore fell from 68th to 83rd. Ouch!

So why is a state with a world-class resource ranked with Uzbekistan and Uganda? In the case of offshore, the report says: “investors continue to be turned off by environmental regulations and related uncertainties in these areas.”

Onshore, the report says, Alaska dropped 15 places “due to poorer scores on a number of issues, including fiscal terms, environmental regulation, the cost of regulatory compliance, uncertainties about protected areas and Native land claims.”

Maybe that explains why a single exploratory well was drilled on the North Slope last year – and a single well this year, despite record high oil prices. No more waiting to reform our oil tax!

But wait, there’s more! The operator of the trans-Alaska pipeline – the economic engine that pays for 90 percent of state government – just issued a report warning that we need to act now to increase flow through the pipeline.

“The study findings make it clear that the technical challenges compound and increase as throughput declines,” said Alyeska Service Company President Tom Barrett. “The simplest, most direct and cost-effective path to dealing with these challenges is to stop the decline by adding more oil.”

Our own Senator Lisa Murkowski quickly called for action on the federal level. And Senator Begich is aggressively pushing the federal government as well, calling the pipeline a national asset that delivers about 12 percent of U.S. oil production.

Here at home, Governor Sean Parnell outlined the “Secure Our Future” strategy, a five-point program to increase pipeline throughput to one million barrels a day:

• Boosting Alaska’s competitiveness and investment climate.
• Structuring the permitting processes to improve resource development decisionmaking.
• Facilitating and incentivizing the next phases of North Slope development.
• Forging national partnerships to increase investment, while protecting the state’s interest.
• Promoting domestic oil production and Alaska’s role.

We know how to improve our business rankings, but our policy makers must agree and take action – as soon as possible.

Calling all champions for Alaska’s future. Let’s work together to improve Alaska’s business climate!

Plan to participate in the Alaska State Chamber of Commerce’s 52nd Annual Conference, where fellow champions will gather to discuss and plan Alaska’s future success. The conference will be in Talkeetna, Alaska from September 19-21. Register today at alaskachamber.com.

Rachael Petro is the President and CEO of the Alaska State Chamber of Commerce.

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