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The Newest Gold Rush


By Marc H. Meyer

THERE ARE MANY sides to the story behind the construction of the Alaska pipeline. Big business touted the pipeline as a symbol of the way American know-how can tackle a tough environment and alleviate a crucial problem facing the country. To its boosters, the pipeline is a story of how a relatively undeveloped region can take advantage of its resources for the economic benefit of the people who live in it. And in fact even with Alaska's soaring inflation rate real income for most of the state's residents rose markedly with the advent of the pipeline. The discovery of oil off the northern shore of Alaska carried with it an enormous potential for broad-based economic benefit: profits for the oil companies, jobs for the unemployed, and oil for the nation.

In another light, however, the pipeline has stained an increasingly rare social environment, one of relative simplicity and decency. To measure money's impact on the Alaskan lifestyle is difficult. But without a doubt, the pipeline, like the gold rush, has in many respects altered Alaskan society for the worse.

Some of the pipeline workers are Alaskan residents, who plan to stay in the state and to spend and invest their wages locally. But there are also the out-of-staters, "boomers," who come into Alaska generally to take as much money out of the state as they can. Those who succeed in getting jobs are, at the best, a drain on the Alaskan economy. But the out-of-staters who can't find work often resort to crime, which has skyrocketed since construction began in '73, in order to afford the state's high costs of living. Pipeline jobs are getting scarcer now, with about 10 miles of construction left in the northern sections of the Truneau Bay area. However, plans for a natural gas pipeline on the scale of the oil pipeline have already been drafted.

BUT THE REAL victims of the pipeline may be the young Alaskans, fresh from high school. Bradley H. Faulkner '80, an Alaska resident, is one of several Harvard students who worked on the pipeline last year. "For someone in my situation, coming out of high school, the money is unparalleled, but once you've got it, it's like 'funny money' because you realize that you can buy just about anything that you have ever dreamed of buying. Anything," Faulkner said recently. He is fairly typical of the Alaskan youth, women as well as men, who upon high school graduation faced basically two options: working on the pipeline or going to college. Like most, Faulkner chose the first option, but with the intention of attending college after a year of work on the pipeline. Many people simply work for several months and then go back to their homes for a respite, where, Faulkner said, they go on buying sprees or take trips abroad. "Money is spent in an easy come, easy go fashion," he said. For a young pipeline worker to have a sense of value for a car, a stereo set, or for money itself is difficult when a couple of months on the job can replace almost anything that is lost, destroyed, or that loses its initial glimmer.

The pipeline has had a disintegrative effect on many families with members in some way involved with the project. Fathers with construction jobs are usually away nine months of each year. Faulkner said in the pipeline terminal city of Valdez, known to Alaskans as "Valdisease," about a third of the housewives prostitute themselves regularly, partly to keep up with the exorbitant prices that face them in the grocery market. Finally, many family structures are jarred by the abundance of high school age children making more money than their fathers.

PIPELINE CITIES are nothing but 'liners' and whores. You've got men who have been going through hell for a couple of months and with a couple thousand dollars in their pockets, just looking for a good time. There's good business all around, even for the police who charge several hundred dollars every time a guy gets thrown in the coop for getting too drunk," Faulkner added.

The capital stakes involved in the pipeline project are enormous. The total cost of the pipeline has skyrocketed from the initial projection of $900 million when construction began in 1973, to a recent figure of about $7.5 billion. The tremendous jump in construction costs can be attributed to a number of specific causes, such as unforeseen construction difficulties in particular areas, inflated material prices, and wage demands presented by the powerful unions.

But a more important cause of the cost explosion seems to be an atmosphere surrounding the project, a "take 'em for what they got" attitude towards the public that prevails in company and union actions. A "cost-plus" philosophy governs the oil companies' buying policies and labor expenditure decisions--companies are assured that cost-overruns will not decrease their profits. "Cost-plus" is in one sense an inducement essential to getting companies to invest large amounts of capital in a high risk situation, but from another perspective, it removes the pressure on companies that would ordinarily cause them to keep a lid on wage demands and seek the greatest possible worker efficiency. "Cost-plus" guarantees that the consumer will pay the tab, not the company.

SINCE CONSTRUCTION began in 1973, 22,000 people have worked on the pipeline. Of the numerous unions which are involved in the project, the two most powerful are the United Brotherhood of Teamsters and Local 798 of the Pipeliner's Union. In the pipeline collective bargaining agreements, the unions obtained the high wages and liberal fringe benefits in return for a no-strike clause which they conceded to the oil companies. The unions got this large quid pro quo because companies face a short construction season due to Alaska's severe winters and cannot afford a temporary cessation of construction during the summer months. Delays then would set back the project for an entire year.

"When you talk politics in Alaska, you talk Teamsters," Faulkner said. The Teamsters membership in Alaska constitutes 10 per cent of the registered voting population in the state. Controlling the material supply line to the construction sites, and a large portion of the flow of consumer goods to Alaskan residents, the Teamsters occupy a bottleneck that affords them substantial political clout. "What they say, goes," Faulkner added.

Worker inefficiency has been one of the main sources of cost increases, although Faulkner said that ALYESKA, the consortium of oil companies that funded the pipeline, has improved the situation recently. Unions set the tone of work on the pipeline. It is to their advantage to spread the fixed amount of work over a longer time than would be ordinarily required, since this will increase employment. And due to "cost-plus" increased labor costs don't mean smaller profits for ALYESKA. "There just isn't a work ethic on the pipeline; in fact, you will probably be yelled at if you work too hard. You are supposed to spread things out as much as possible," Faulkner said.

Of course the jobs themselves are difficult. The worker on the pipeline makes his big money during the hours he puts in on overtime, which usually doubles the regular eight-hour working day. Faulkner said he found the mental tedium of a typical eighteen-hour day on the job agonizing. "You sell your soul to ALYESKA when you go to the 'line'," he said. But Faulkner acknowledged afterwards, "I'll probably end up going back there next summer, because where else can I earn that much money?" Looking at one of his paychecks, it is not difficult to see why.

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