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An Alaska state flag blows in the wind at the Robert B. Atwood Building in Anchorage, Alaska.
David Ryder | Bloomberg | Getty Images

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.

A snow covered road with power lines in Kaktovic, Alaska.
David Howells | Corbis Historical | Getty Images

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.

Medical Assistant Julia Naea administers the Pfizer Covid-19 vaccine at the Blood Bank of Alaska in Anchorage on March 19, 2021.
Frederic J. Brown | AFP | Getty Images

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.

Alaska Gov. Mike Dunleavy, while speaking at a dedication ceremony for a hydroelectric turbine generator in Igiugig, Alaska, on Tuesday, July 16, 2019.
Luis Sinco | Los Angeles Times | Getty Images

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.

A part of the Trans Alaska Pipeline System is seen on September 17, 2019 in Fairbanks, Alaska.
Joe Raedle | Getty Images

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.”

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Italy says that it’s illegal for Alfa Romeo to call its new EV the Milano

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Italy says that it’s illegal for Alfa Romeo to call its new EV the Milano

What’s an Alfa Romeo without a cool Italian-sounding name? The Stellantis-owned company is naming its first BEV after the famous city of Milan, but the Italian government is now playing hardball by saying that’s illegal since the car will be built in Poland. If it’s not made in Italy, it can’t sound Italian.

Alfa Romeo – the iconic Italian brand founded in 1910 – unveiled its first all-electric car this week, a small SUV dubbed the Milano. Stellantis has been at odds with the Italian government for months for what he says is its lack of support in EV adoption and not backing home-grown brands Fiat and Alfa Romeo, but the government says that moving production outside the country is a step way too far.

Italy’s industry minister Adolfo Urso, according to Automotive News Europe, slammed Stellantis for the decision to build the EV at the company’s Tychy plant in Poland – meaning the car will be the first Alfa Romeo to be entirely built outside of Italy. And if the electric vehicle isn’t built in Italy, it can’t carry an Italian-sounding name according to Italian law.

“A car called Milano cannot be produced in Poland. This is forbidden by Italian law,” Urso said, referring to 2003 law that prohibits any products being sold with Italian-sounding names that aren’t made in Italy. Yet somehow calling it the Tychy doesn’t have the same ring.

“This law stipulates that you cannot give indications that mislead consumers. So a car called Milano must be produced in Italy. Otherwise, it gives a misleading indication which is not allowed under Italian law,” he added, according to Automotive News Europe.

Urso is referring to a law that says it is illegal to falsely present a foreign-made product as coming from Italy, but has typically been invoked against food products, such as forbidding a US-made “Parmigiano Reggiano” cheese. France has similar laws protecting its products, such as prohibiting sparking wine be called “champagne” if it doesn’t come from the Champagne region of France.

The rationale for building the vehicle in Poland, according to Stellantis CEO Carlos Tavares, is that it will shave off €10,000 from its retail price.

While pricing has yet been released, the new EV is based on Stellantis’s e-CMP platform, which powers its Jeep Avenger. A 54 kWh battery pack will deliver up to 250 miles of range, and in an urban cycle, it can get up to 366 miles of range.

Italy, home to some of the oldest, most polluting cars in Europe, is working (finally) to change that, with the government weighing a plan to put €930 million ($1 billion) into some enticing financial incentives to nudge drivers toward electric cars. This includes an incentive topping €13,750 to allow Italian citizens with an annual income lower than €30,000 to replace old Euro 2 models (meeting emissions standards set back in 1997) for new electric cars. An EV made is Italy is even better, of course.

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IEA downgrades oil demand growth forecast as prices heat up on elevated Middle East tensions

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IEA downgrades oil demand growth forecast as prices heat up on elevated Middle East tensions

An oil pumpjack is shown near the Callon Petroleum vicinity on March 27, 2024 in Monahans, Texas. 

Brandon Bell | Getty Images

The International Energy Agency on Friday downgraded its forecast for 2024 oil demand growth, citing “exceptionally weak” OECD deliveries, a largely complete post-Covid-19 rebound and an expanding electric vehicle fleet.

In its latest monthly oil market report, the IEA said it had revised down its 2024 oil demand growth forecast by around 100,000 barrels per day (bpd) to 1.2 million bpd.

The global energy watchdog said that it expected the pace of expansion to decelerate even further to 1.1 million bpd next year “as the post-Covid 19 rebound has run its course.”

The IEA’s report comes amid a rebound in oil prices on elevated Middle East tensions, with energy market participants closely monitoring the prospect of supply disruptions from the oil-producing region.

Iran, which is a member of the Organization of the Petroleum Exporting Countries, has vowed to retaliate after it accused Israel of bombing its embassy in the Syrian capital of Damascus earlier this month.

The attack has ratcheted up tensions in a region already grappling with the ongoing Israel-Hamas war. Israel has not claimed responsibility for the attack.

International benchmark Brent crude futures with June delivery traded 0.8% higher at $90.45 per barrel on Friday at 9:30 a.m. in London, while U.S. West Texas Intermediate futures with May delivery rose nearly 1% to trade at $85.84 per barrel.

“We’re seeing the surge in [electric vehicle] sales, especially in China and also in Europe, really taking into gasoline demand, but also in the United States,” Toril Bosoni, head of oil industry and markets division at the IEA, told CNBC’s “Street Signs Europe” on Friday.

“There has been a lot of talk about sales not increasing as much as maybe was expected, but EV sales and increased fuel efficiencies in the car fleet is lowering gasoline demand, at least in advanced economies and particularly in China.”

Asked about some of the main concerns relating to oil supply security, Bosoni replied, “We are watching, obviously, the Middle East very closely. The continued tanker attacks in the Red Sea is of key concern, but also escalating tensions between Iran and Israel, and then we’re seeing tensions between Russia and Ukraine continue, with attacks on Russian refineries.”

“So, there are several tension points in the oil market today that we’re watching very closely that could have major impacts … if there would be any significant outages,” she added.

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Tesla unveils new Sport Seats to absorb Model S Plaid’s insane power

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Tesla unveils new Sport Seats to absorb Model S Plaid's insane power

Tesla has unveiled new Sport Seats for the Model S Plaid to absorb the electric supercar’s insane power better.

While it’s in the form of a family sedan, the Model S Plaid could easily pass as an electric supercar with its 1.99-second 0 to 60 mph acceleration.

That’s more power than anyone would need, but it is fun.

Some Model S Plaid owners even like to take the fun to the racetrack. When cornering, you can really feel the Gs on the racetrack.

Tesla’s Model S seats are comfortable, but they are not designed for super-spirited driving, which the rest of the vehicle enables.

Today, Tesla decided to address the issue with the release of new Sports Seats:

They obviously feature much more pronounced side support. Here are the main features of the seats:

  • Increased lateral support
  • Modular seat architecture for comfort & support, plus same 12-way power adjust, heating & ventilation
  • High performance suede for increased grip & reduced weight

Here’s another look at the new seats:

The seats are now standard for the $90,000 Model S Plaid and included on all cars built since the beginning of the month.

Electrek’s Take

We had known new sports seats were coming to the new Model 3 Performance, which is expected to be unveiled any day, but it makes sense that the Model S Plaid would get them first.

The vehicle’s level of performance deserves sports seats.

I am surprised that Tesla is making it standard rather than a paid option, but we’ll take it.

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