People. Ideas. Success.€¦ · Ideas. Success. Alaska’s Place in the World Economy: A Call to...

People. Ideas. Success.

Alaska’s Place in the World Economy:

A Call to Action

Presented by:

Scott Minerd, Chief Investment Officer

Guggenheim Investments

March 2, 2012

GDP Comparison – U.S. vs. Arctic Regions

Source: BEA, Haver Analytics, Guggenheim Investments. Data as of 12/31/2010. *Note: Gross State Product (GSP) for Alaska.

$1,577 $1,480

$459 $413 $310

$239

$49 $13 $0 Bn

$500 Bn

$1,000 Bn

$1,500 Bn

$2,000 Bn

U.S. Overall

Canada Russia Sweden Norway Denmark Finland Alaska Iceland

2010 Nominal GDP* in U.S. Dollars Comparison – U.S. vs. Arctic Regions

$15,000 Bn $14,587 Bn

GDP per Capita – U.S. vs. Arctic Regions


$85 K

$69 K

$56 K

$49 K $47 K $46 K $46 K $45 K

$10 K

$0 K

$20 K

$40 K

$60 K

$80 K

$100 K

Norway Alaska Denmark Sweden U.S. Overall

Iceland Canada Finland Russia

2010 Nominal GDP* per Capita Comparison – U.S. vs. Arctic Regions

Economic Growth in the Arctic Regions (2000 – 2010)


**CAGR is Compounded Annual Growth Rate

Real GDP* Comparison

(Normalized to 2000 = 100)

Real GDP 10-Year

(CAGR**, 2000 – 2010)

4.8%

2.8%

2.2% 2.1% 1.9% 1.9%

1.6% 1.5%

0.6%

0%

1%

2%

3%

4%

5%

6%

Alaska

U.S.

Russia

Norway

Denmark

Sweden Canada

Iceland

100

110

120

130

140

150

160

170

Ten-Year Real GDP Growth by Industry

Source: BEA, Guggenheim Investments. Data as of 12/31/2010. *Note: CAGR is Compounded Annual Growth Rate

-6% -4% -2% 0% 2% 4% 6% 8%

Educational services

Construction

Utilities

Accommodation and food services

Agriculture, forestry, fishing, and hunting

Government

Transportation and warehousing

Retail trade

Real estate and rental and leasing

Natural Resource Extraction

Wholesale trade

Manufacturing

Health care and social assistance

Finance and insurance

Professional, scientific, and technical services

Information

Alaska

U.S.

Real GDP Growth by Industry – U.S. vs. Alaska (2000 – 2010 CAGR*)

Alaska – Contribution to Economic Growth

Source: BEA, Haver Analytics, Guggenheim Investments. Data as of 12/31/2010.

Cumulative Changes in Real GSP of Alaska (2000 – 2010)


-$3 Bn

$0 Bn

$3 Bn

$6 Bn

$9 Bn

$12 Bn

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Other Industries


Government Budget Balance as a Percent of GDP

Source: Haver Analytics, Guggenheim Investments.

Government Budget Balance as a Percent of GDP (2010)

-9.3% -8.5%

-5.7%

-4.7% -4.0%

-2.1%

0.4% 1.1%

5.0%

-10%

-8%

-6%

-4%

-2%

0%

2%

4%

6%

Iceland U.S. Denmark Finland Russia Canada Sweden Alaska Norway




U.S.

IMF G7 Countries

Alaska

Average of Arctic Regions

-12%

-8%

-4%

0%

4%

8%

12%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Government Debt as a Percent of GDP

Source: Haver Analytics, Guggenheim Investments. *2009 Data for Iceland

Government Debt as a Percent of GDP (2010)

1.4% 6.8%

26.6% 32.0% 33.7%

39.1% 39.3%

78.6%

92.2%

0%

20%

40%

60%

80%

100%

Alaska Russia Norway Canada Sweden Finland Denmark Iceland U.S.




U.S.

Alaska

Average of Arctic (ex. Russia due to discontinued data)

IMF World Average

-10%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Unemployment Rates Across Arctic Regions

Source: Haver Analytics, Guggenheim Investments. Data as of 1/31/2012.

Unemployment Rate Comparison

3.3%

6.0% 6.3%

7.3% 7.5% 7.5% 7.6%

7.8%

8.3%

2%

3%

4%

5%

6%

7%

8%

9%

Norway Russia Iceland Alaska Finland Sweden Canada Denmark U.S.

Alaska – Gross State Product Breakdown



30%

Government 17%

Finance, Insurance, Real

estate and Leasing

12%

Others 10%

Transportation and Warehousing

8% Construction and

Manufacturing 7%

Retail and Wholesale Trade

7%

Healthcare and Social Assistance

5%

Professional, Scientific, and

Technical Services

4%

Alaska’s Gross State Product (GSP) Breakdown – (2010)

The Importance of the Oil Industry to Alaska’s Economy

Source: Scott Goldsmith – Oil Pumps Alaska’s Economy to Twice the Size, - But What’s Ahead? February 2011.

Others 50%

Jobs from oil production

and state oil revenues

34%

Spinoff jobs from oil wealth 16%

Alaska Employment Breakdown

Share of Jobs in Industry

Depend on Petroleum

State Government 75%

Local Government 57%

Finance/Real Estate 33%

Communications/

Utilities 32%

Trade 27%

Construction 27%

Transportation 23%

Oil Production In Alaska

Source: Alaska Division of Oil and Gas. Data as of 12/31/2010.

Alaska Oil Production (Millions of Barrels)

0

100

200

300

400

500

600

700

800

Oil and Natural Gas Reserves

Source: U.S. Energy Information Administration, Division of Oil and Gas of Alaska, BP Statistics.

Oil Reserves

(Billion Barrels)

Reserve /

Production

Natural Gas Reserves

(Trillion Cubic Meters)

Reserve /

Production

US 30.9 11.3 7.7 12.6

Canada 32.1 26.3 1.7 10.8

Norway 6.7 8.5 2 19.2

Denmark 0.9 9.9 0.1 6.4

Russia 77.4 20.6 44.8 76

Sweden -- -- -- --

Finland -- -- -- --

Iceland -- -- -- --

Alaska 4.7 21.4 36 11.2

Alaska – Transportation

Source: Airports Council International

2 Million MT 3 Million MT 4 Million MT 5 Million MT

Louisville (U.S.)

Narita (Japan)

Dubai (UAE)

Frankfurt (Germany)

Paris - Charles de Gaulle …

Ted Stevens Anchorage (U.S.)

Incheon (S.Korea)

Shanghai Pudong (China)

Memphis (U.S.)

Hong Kong (China) 23.2%

5.9%

27.1%

16.1%

33.1%

16.8%

20.5%

17.8%

17.1%

11.1%

YoY % Cargo Traffic (Metric Tons)

World’s Busiest Airports by Cargo Traffic (2010)

Export of Goods as a Percent of GDP

Source: Haver Analytics, Guggenheim Investments. Data as of 12/31/2011 for Sweden, Norway, and the U.S., and as of 12/31/2010 for the

other regions

Exports as a Percent of GDP Comparison

8.5% 9.8%

24.9% 27.1%

28.9% 30.9%

32.9% 34.7%

36.5%

0%

10%

20%

30%

40%

Alaska U.S. Canada Russia Finland Denmark Norway Sweden Iceland

Export Growth in Alaska

Source: Haver Analytics, Guggenheim Investments, U.S. Census Bureau.

Nominal Exports of Goods from Alaska

$2.5 $2.5 $2.5

$2.7

$3.2

$3.5

$4.0 $4.0

$3.5

$3.3

$4.2

$2 Bn

$3 Bn

$4 Bn

$5 Bn

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Favorable Demographic Composition in Alaska

Source: U.S. Census Bureau, Haver Analytics, Guggenheim Investments. Data as of 12/31/2010.

37%

15%

21% 20%

8%

34%

13%

21% 19%

13%

0%

5%

10%

15%

20%

25%

30%

35%

40%

<25 25-34 35-49 50-64 65+

Alaska U.S. Overall

Population by Different Age Groups as a Percent of Total Population

Education in Alaska

Teachers per 100 Students –

Elementary & Secondary Education

Source: National Center for Education Statistics. Data as of 2009 – 2010.

High School Dropout Rate

Source: National Center for Education Statistics. Data as of 2007 – 2008.

Bachelor’s Degree or Higher

as a % of Persons Age 25+

Source: U.S. Census Bureau. Data as of Year 2010

Graduate Student Enrollment Ratio –

Postsecondary Education

Source: U.S. Census Bureau. Data as of Year 2010

6.14

6.50

6.0

6.2

6.4

6.6

Alaska U.S. Average

8.6%

14.0%

8%

10%

12%

14%

16%

Alaska U.S. Average

7.3%

4.1%

0%

2%

4%

6%

8%

Alaska U.S. Average

27.0%

27.9%

26%

27%

27%

28%

28%

Alaska U.S. Average

8.3

12.3

6

8

10

12

14

Alaska U.S. Average

Business-Performed R&D

as Share of Private-Industry Output

Patents Awarded per 1,000 Individuals

in Science & Engineering Occupations

Research and Development in Alaska

Source: National Science Board and National Science Foundation. Data as of Year 2007 Source: National Center for Education Statistics. Data as of 2007 – 2008

Source: National Science Board and National Science Foundation. Data as of Year 2008 Source: National Science Board and National Science Foundation. Data as of Year 2007

0.7%

2.6%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

Alaska U.S. Average

0.2%

2.2%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

Alaska U.S. Average

1.5

13.4

0

3

6

9

12

15

Alaska U.S. Average

R&D as Share of Gross State Product (%) Science & Engineering Graduate Students

per 1,000 Individuals

Recent Investment Developments in the Arctic Regions

Source: Bloomberg, Guggenheim Investments. Data as of latest available as of 2/29/2012.

Date Activity

Sep-05 Russia to spend $2.5 billion on Arctic port to boost oil shipments

Jan-08 Russia plans Arctic tidal power plant to boost renewable energy

Aug-08 Iceland to offer Arctic offshore drilling licenses

Oct-10 Russia's Norilsk Nickel plans $20 billion program to boost arctic output

Oct-10 Canada is investing $100 million (CAD) over five years to provide the geosciences knowledge necessary

for private sector exploration companies to guide investment decision

Apr-11 Russia's Lukoil to buy 25% of Bashneft Arctic fields for $167 million

May-11 Shell announces offshore drilling plan near northwest coast of Alaska

Jun-11 Greenland is expected to issue more than 200 new prospecting, exploration and mining license permits

in 2011

Aug-11 ExxonMobil reaches deal with Russia and Rosneft to explore the arctic region of Russia for oil and gas

Sep-11 Canada announced $67.3 million for research on Arctic climate change

Feb-12 Canada's Telesat proposes $40 Million (CAD) investment in Arctic infrastructure

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Important Notices and Disclosures

People. Ideas. Success.€¦ · Ideas. Success. Alaska’s Place in the World Economy: A Call to...

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