These are tough times in Skagway, Alaska, population 1,183.
“We’re in hard core survival mode,” Mayor Andrew Cremata told CNBC.
In a normal summer, the Southeast Alaska town would be teeming with tourists from the cruise ships sailing the Inside Passage. Residents could drive 15 miles up the Yukon Highway into Canada to run their basic errands, or they could hop on a state-run ferry to the next town over, Haines.
But this year, the cruise ships have just started running again. Cremata is hoping Skagway will see 100,000 passengers this year; in 2019 they had 1.1 million. The border to Canada remains closed to non-essential traffic, and the ferries, part of the Alaska Marine Highway System, are plagued by budget cuts.
“Just getting your family down to go see a dentist or doctor, when that becomes burdensome or overly expensive, there’s a point where people have just had it and move away,” Cremata said.
Multiply Skagway’s situation by thousands of communities and more than 700,000 Alaskans, and you can begin to understand why The Last Frontier finds itself in last place in CNBC’s 2021 America’s Top States for Business rankings.
It is the sixth bottom-state finish for Alaska in 14 years. The state previously achieved the dubious distinction in the first four years of the study between 2007 and 2010, hitting bottom again in 2018.
As difficult as the past year has been in this state and across the country, it presented opportunities that Alaska failed to capitalize on.
Alaska met the pandemic with the best-funded public health system in the nation, according to the United Health Foundation, spending $289 per person per year. That is more than three times the national average. Earlier this year, the state was setting the pace for Covid-19 vaccinations, even in its most remote regions.
As the national economy struggled to regain its footing, Alaska offered a generally business-friendly regulatory climate — its legal system tilts toward business, and the number of state laws and regulations is manageable. The conservative-leaning Tax Foundation ranks Alaska’s tax climate the third-best in the country.
In Skagway, Mayor Cremata said state and federal officials have been extremely helpful through the crisis.
“They are always ready and willing not only to engage us as a community, but individual people and business owners in the community. People that were struggling with problems with unemployment and all these kinds of things,” he said.
And at a time of social upheaval, Alaska offered its relatively diverse population some strong protections against discrimination.
High costs hurt Alaska
So how did Alaska manage to finish No. 50 again in 2021 despite so many advantages going in? In a word: cost.
Cost of Doing Business carries the most weight in this year’s study. As the recovery builds, states are touting low business costs more than any other factor, according to CNBC’s analysis. Alaska is an extremely expensive place to do business.
Even Alaska’s competitive tax climate, which earns points for relatively low property taxes and no personal income tax, includes a top corporate tax rate of 9.4%, among the highest in the country.
Utility costs are oppressive. Alaskans paid an average of $20.20 per kilowatt hour for electricity last year, according to U.S. Department of Energy data, with even higher rates in remote areas. That was second only to Hawaii, and nearly double the national average. Wages are high thanks to the high cost of living, and office and industrial space — which are in short supply — is pricey.
Cremata said he is worried about how the price of everything seems to be creeping higher.
“Everything’s barged in,” he said. “And so, if the cost of fuel goes up, it affects the rates on the barge and that affects the price of your milk and eggs.”
Indeed, even that high rate of public health funding may be deceiving, because health care in Alaska is so expensive. An office visit to a doctor in Anchorage averaged more than $206 last year, according to the Council for Community and Economic Research, C2ER. That is more than twice the cost in Phoenix, Arizona.
Meanwhile, Alaska’s Covid-19 vaccination rate, once the envy of the nation, has fallen below the national average, according to data from the U.S. Centers for Disease Control and Prevention.
In March, Alaska became the first state in the nation to make vaccines available to everyone aged 16 and older. Officials theorize that meant those who wanted to be vaccinated were quick to get their shots, leaving vaccine-hesitant residents — many in rural or remote areas — who have proven difficult to convince.
Vaccination rates are a metric in the Top States’ Life, Health and Inclusion category, where Alaska finishes No. 19 this year.
Internet access remains a challenge
In addition to its cost issues, Alaska ranks No. 49 in the Top States’ Infrastructure category, above only Maine. It is yet another lost opportunity. Alaska might have been able to use the nation’s move toward remote work to partly offset its inherent infrastructure disadvantages, which include its distance from the rest of the country and its vast size.
This year’s Top States study introduced broadband connectivity as an infrastructure metric. But broadband in Alaska is the worst in the nation, according to BroadbandNow Research.
In Skagway, Cremata said internet service is cumbersome and expensive.
“You have to actually have a landline in your house for it to work,” he said. “So, the internet has a pretty substantial price to it, but then you also have a $30 charge because you need a landline for the broadband to work.”
According to BroadbandNow, fewer than 61% of Alaskans have access to broadband at all, and none have access to a low-priced plan, which the organization defines as costing less than $60 per month. The average speed is a paltry 58.6 Mbps, or one-third the speed in the top-ranked state, New Jersey.
Cremata said that early in the pandemic, when he and other local leaders worried the cruise ships could disappear for five years, they convened a task force to consider ways to reinvent the economy. One of the ideas was to make Skagway an internet hub, but it went nowhere.
“You’d have to have really fast internet, obviously, because you probably want to have all of your communications done in the cloud, which is pretty much impossible right now in Skagway,” he said.
In May, Gov. Mike Dunleavy created a task force to recommend ways to improve connectivity in the state.
“On the heels of a global pandemic, now more than ever do we see the critical role that the internet plays in nearly every part of life and the importance of good connectivity for every Alaskan,” Dunleavy said in a statement.
But it is Alaska’s third broadband task force in the last decade, with little to show for the efforts. It is also unclear whether the state can muster the funding needed to bring its service up to date.
In his statement announcing the task force, Dunleavy, a Republican, emphasized the use of federal pandemic relief money to pay for the expansion. And while his administrative order creating the task force also contemplates using state funds, Dunleavy and the state legislature are already locked in a titanic struggle over the budget.
This month, Dunleavy vetoed more than $200 million in state spending approved by the legislature, with cuts aimed at everything from tourism marketing to mental health services.
Dunleavy also vetoed $8.5 million in funding for Alaska’s ferry system known as the Alaska Marine Highway System, a link to the outside world for communities like Skagway.
And he relentlessly slashed the University of Alaska’s budget, with cuts totaling $70 million over three years. That hurts the state’s ranking in Education, where it finishes No. 47.
Crude oil rebound hasn’t helped Alaska
Hanging over all of Alaska’s business and financial woes is the price of oil, the state’s economic lifeblood. Oil revenues typically account for more than one-third of the state’s budget.
Last year, as weak demand during the pandemic pushed oil prices to historic lows, oil production in Alaska fell to its lowest level in more than 40 years, according to the Energy Department.
This year, prices have rebounded, but production in Alaska has not. Alaska oil producers face much lower cost competition in the lower 48, as well as an intensifying tug-of-war over federal oil leases. Production through April was down nearly 5% from a year ago.
State budget forecasters expect oil production tax revenue will be around $311 million in the 2021 fiscal year that ended on July 1. That would be a 9% increase from 2020, but a 36% decline from the year before.
Those kinds of numbers could make it even harder for Alaska to climb out of the cellar next year.
Cremata said he hopes the crisis will convince Alaska to think beyond its traditional economic drivers including tourism, fishing and oil.
“You can’t think backwards. You have to think forwards,” he said. “Perhaps, this is like a chaos-opportunity moment — where there’s chaos, there’s opportunity, so that people in Alaska, who maybe have been relying on things that aren’t as reliable anymore, maybe try to expand towards some different ideas.”
Tesla Model 3 prototype spotted ahead of rumored design refresh
A new Tesla Model 3 prototype with camouflage has been spotted in California ahead of a rumored refresh coming next year.
Over the last week, there have been rumors that Tesla is working on a Model 3 refresh that would come during the second half of 2023.
The project is reportedly codenamed ‘Highland’.
For a few years now, Tesla has been integrating its large casting technology into Model Y with single large casting parts replacing dozens of parts in the electric SUV.
This new technology has enabled Tesla to greatly improve manufacturing efficiency with Model Y compared to Model 3. CEO Elon Musk said that Tesla will bring the same technology to Model 3 eventually, but he couldn’t exactly say when.
The problem is that such an update to the Model 3 would temporarily slow down production and Tesla couldn’t afford that while it was still ramping up Model Y production.
However, Model Y production is now starting to exceed Model 3 production and it could be good timing for Tesla to update the Model 3 and use a design refresh to introduce the large from and rear casting.
Now a new Model 3 prototype has been spotted in Santa Cruz, California by Twitter user omg_Tesla/Rivian:
The Model 3 is equipped with manufacturer plates, which would indicate that it is owned by Tesla, and combined with the heavy camouflage in the front and back of the vehicle, it likely points to the automaker testing an updated version of the electric sedan.
However, not much can be discerned from the pictures thanks to the camouflage, which even covers large parts of the headlights.
Nonetheless, some commenters on Twitter did notice what could potentially be a camera embedded in the corner of the front right headlight:
It’s barely visible and therefore unconfirmed, but it would make sense to place a camera around that spot since Tesla’s current self-driving sensor suite has a blind spot around the bumper and it could also help with the creeping forward to see traffic before taking a turn in Full Self-Driving – something FSD Beta has issues with right now.
Tesla has always said that it would keep improving its Autopilot and Full Self-Driving hardware, but current owners who bought vehicles with the promise that self-driving will be enabled through software updates are concerned that Tesla might find that it would need a new sensor suite to achieve the promise.
What do you think about this Tesla Model 3 prototype? Is the camouflage hiding a Model 3 design refresh? A new Autopilot sensor suite? Let us know what you think in the comment section below.
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OPEC+ agrees to stick to its existing policy of reducing oil production ahead of Russia sanctions
Led by Saudi Arabia and Russia, OPEC+ agreed in early October to reduce production by 2 million barrels per day from November.
Vladimir Simicek | Afp | Getty Images
An influential alliance of oil producers on Sunday agreed to stay the course on output policy ahead of a pending ban from the European Union on Russian crude.
OPEC and non-OPEC producers, a group of 23 oil-producing nations known as OPEC+, decided to stick to its existing policy of reducing oil production by 2 million barrels per day, or about 2% of world demand, from November until the end of 2023.
Energy analysts had expected OPEC+ to consider fresh price-supporting production cuts ahead of a possible double blow to Russia’s oil revenues.
The European Union is poised to ban all imports of Russian seaborne crude from Monday, while the U.S. and other members of the G-7 will impose a price cap on the oil Russia sells to countries around the world.
The Kremlin has previously warned that any attempt to impose a price cap on Russian oil will cause more harm than good.
Oil prices have fallen to below $90 a barrel from more than $120 in early June ahead of potentially disruptive sanctions on Russian oil, weakening crude demand in China and mounting fears of a recession.
Led by Saudi Arabia and Russia, OPEC+ agreed in early October to reduce production by 2 million barrels per day from November. It came despite calls from the U.S. for the group to pump more to lower fuel prices and help the global economy.
What’s the status of California’s upcoming $10M electric bike rebate program?
California allocated $10 million for a rebate program to help make electric bikes more affordable. But hang on there; it’s not active quite yet.
The move is part of a years-long effort to help reduce the price of expensive electric bicycles for state residents. The ultimate goal is to make it easier for commuters to switch from car transportation to e-bike transportation.
It makes sense when you consider the long list of benefits. From cleaner air to reduced traffic and improved health/fitness, electric bikes solve many of the problems plaguing California (and the rest of the country).
But the path towards a statewide incentive program to reduce e-bike prices hasn’t been quick or easy.
California has earmarked over $1 billion this year as incentives for electric cars and charging infrastructure, according to Streetsblog. That’s in addition to the billions already put into electric car incentives.
Back in 2019 electric bikes finally got the attention they deserved from lawmakers when California’s S.B. 400 was passed, which included a section that permitted electric bikes to be included in future clean air vehicle incentive programs.
That paved the way for the possibility of statewide e-bike rebate programs, but it didn’t actually create any.
Last year California got one step closer to that goal when it included a $10M allocation in the state budget for an e-bike rebate program. As Assemblymember Boerner Horvath said at the time:
“Making e-bikes more affordable is one of the most effective ways to get Californians out of their cars and reduce emissions. I’m thrilled that the full funding I requested for purchase incentives, education, and training is included in the budget we approved. This program represents a priority shift in the right direction and, once implemented, will help folks from all backgrounds choose a healthier, happier way to get around.”
That was another huge step in the right direction, but it hasn’t yet resulted in an active program.
That’s expected to begin in early 2023, with a number of key guidelines for California’s first statewide e-bike voucher program already laid out.
According to the California Bicycle Association, the program will create a $750 voucher for a standard electric bicycle and a $1,500 voucher for a cargo electric bicycle. There will be additional incentives for anyone whose income is under 225% of the federal poverty level (FPL) or who lives in disadvantaged communities.
But in order to qualify for the voucher, participants’ household income must be below 400% of the FPL, which amounts to $51,000 for a single person and $106,000 for a family of four at current figures.
The program will include Class 1 electric bikes (pedal assist up to 20 mph or 32 km/h) and Class 2 electric bikes (pedal assist and/or throttle up to 20 mph or 32 km/h), but will NOT include Class 3 e-bikes (pedal assist up to 28 mph).
Qualifying bikes must also either be purchased at a local bike shop in California, or online from a company that has “a business location in California”.
The move could see California align with other states that have created or already implemented electric bicycle incentives. Vermont became the first state in the US to offer a statewide e-bike rebate program. Oregon is also working on creating an e-bike incentive program that could soon become law, as New York attempts to do the same.
Many cities such as Denver, Colorado have also implemented their own local programs, though the funding is usually much smaller than statewide programs.
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