COLUMN ONE : Spill Leaves Oil, Fish on the Skids : The futures of Alaska’s biggest revenue producer and its largest employer look grim. Virtually all the state’s residents are suffering in the aftermath of the petroleum disaster.

TATITLEK, Alaska —  It was the tail end of winter in 1989--the deer season given out, herring beginning to spawn their succulent roe--when the rhythm of economic life changed permanently in this traditional Native Alaskan village.

Martha Vlasoff and her neighbors heard about the Exxon Valdez spill from--where else?--”Good Morning, America.” Though less than five miles from the spreading crude, they could only guess that emergency crews had tried to burn the oil off the water when acrid smoke rolled through their homes and past the sky-blue cupolas of the Russian Orthodox church.

Since then, “people haven’t been able to handle the stress,” Vlasoff recalled recently. “Now we’ll never be the same. Our confidence has been shaken. We had a certain way of life.”

From subsistence hunters to investment bankers, virtually all Alaskans have found their futures rearranged by the five-year saga that followed the largest petroleum spill in North America, dumping 11 million gallons of crude oil in a body of water about two-thirds the size of Lake Michigan.

The $5-billion court judgment against Exxon Corp. in late summer refocused attention among Americans in the Lower 48 on the problems of Alaska’s fishermen. But Alaskans worry about the deep, potentially long-term harm done to the state’s two biggest industries, fish and oil. And the state’s lifeblood oil production has been slowed sooner than everyone had hoped.

After the spill, Congress, facing an angry, skeptical public, dropped all notions of allowing oil exploration in the Arctic National Wildlife Refuge--located atop what appears to be Alaska’s last big oil field.

Now, after years of bitter wrangling--in court and over dinner tables--many in the state that bills itself as the “last frontier” accept the notion that Alaska’s golden promise of financial opportunity may never be quite the same.

In peoples’ homes and businesses, changes range from the basic diets of Native Alaskans living near the spill to the larger specter of the state’s economic decline.

In this wrenching adjustment, once-healthy businesses have folded, particularly in fishing, the state’s biggest employer. Oil industry layoffs have become depressingly familiar. New service industries have added jobs, but the overall wage rate has dropped. People now routinely attribute their divorces partly to financial stress from the spill.

“The area that seemed to be ignored by Exxon and everyone else was not the damage to the land, but to the people,” said Stan Stephens, who has owned and operated tour boats in Valdez for more than 30 years. “It’s been enormous, and it goes on and on.”

Particularly in the fishing communities, which had little else to offer residents when the salmon and herring disappeared, “You have a whole lot of people who don’t have anything to do,” said Steve Picou, a sociologist who studied stress in Prince William Sound communities for four years after the 1989 disaster. Picou contends that the spill “seriously disrupted the fabric of the community.”

Of course, people also adjust and thousands of Alaskans--including fishermen--made money on the spill cleanup. Certainly some changes wrought by the disaster have also been positive.

Among legislators and business leaders, there is lots of talk--though little action yet--about diversifying the state’s economy. And the U.S. Coast Guard and the oil companies are far better prepared for future spills.

Mixed Blessings

Tourism was also up 10% this summer over last, as cruise lines cut prices and expanded operations in the state. Though traces of the spill remain around the sound, including on Knight Island, where some of the first beaches were hit, it long ago lost its toxicity and is now mostly out of sight.

And earlier this summer, after years of grinding litigation, Exxon was ordered to pay $5 billion in punitive damages--equal to twice this year’s state government budget--to Prince William Sound residents and businesses.

Whatever survives Exxon’s appeal likely will be divvied up in proportion to damages awarded in other trials. But the sound’s 10,000 commercial fishermen, the largest group of plaintiffs, are expected to see most of it. Most say they could use it.

Salmon runs are notoriously unpredictable. At the moment, the fishermen are celebrating a big pink salmon season. “This is really the first good news they have had in years,” said Joe Sullivan, resource program manager for restoration for the Alaska Department of Fish and Game.

But these are hatchery-grown fish that were spawned in fresh water from the surrounding Chugach Mountains. Wild pink salmon, and herring, Prince William Sound’s other big commercial species, spawn in the sound. They haven’t come back and seem to be genetically damaged by the oil, according to Sullivan.

Since the spill, Tom Lopez has had a hard time of it on his 50-foot salmon boat. For three years he couldn’t make the boat payments, and he’s had to support three children by driving a truck for a contractor on the pipeline.

“Everybody’s a lot leaner,” he said of himself and his fellow fishermen. “I lost my wife, maybe because of the stress. After the spill, I had to step off the boat.” And the once-coveted pink salmon fishing permits--which Lopez says traded in the industry for $350,000 the day the Exxon Valdez struck Bligh Reef--can be had today for just $26,000.

Raymond L. Cesarini, president of Sea Hawk Seafoods, a fish processor in Valdez, once had $12 million in annual sales. After the spill, that was cut in half, then to nothing, for lack of fish and workers willing to clean salmon for $7 an hour. Cleaning oily rocks paid $17.

“With 10,000 people working on the oil spill,” he said recently, “it was hard to find help.” And one bad year leaves no savings to buy fish the next season. “You’re out of money, honey,” Cesarini said.

Boom to Bust

Cesarini’s wife, also his business partner, left him in 1990. Even a deal to sell his plant--to be turned into a marine mammal rehabilitation center in the event of another spill--has fallen through.

Native Alaskans in the sound are still waiting for their seal, sea lion and ducks to return. While they do, they have to generate cash to buy more store-bought beef, which they don’t much like.

In Tatitlek, a village of just over 100 people where visitors have been welcome by invitation only, the need for cash has brought forth a string of modest economic development projects. One hope: to attract tourists to their postcard-perfect village by enlarging its small dock and port and extending the village landing strip.

Applying for start-up money from funds set up as a result of earlier spill damage suits, as well as a share of the $5-billion Exxon judgment, the village hopes it will finance a smoked-fish business, a clam-restoration project and expansion of an oyster mariculture operation.

Meanwhile, Martha Vlasoff has left the village and is separated from her husband, a subsistence hunter.

“I always felt that my husband was such a good hunter that . . . if the rest of the world was destroyed, we could live off the land,” she said recently in a small apartment in Cordova. The village now has “a lack of confidence in our natural resources,” she said. “ . . . But it’s not the nature of a hunter to admit something like that.”

But the shift that affects all Alaskans is the accelerated end of the state’s oil boom.

As the gigantic Prudhoe Bay oil field plays itself out, efforts have so far failed to find another Alaskan “elephant,” as the oil industry terms the biggest fields.

The most promising source of new oil--the Arctic National Wildlife Refuge--abruptly became off limits to exploration when the nation vented its anger over the spill and the environmental havoc it created.

Exploration in the refuge would literally take an act of Congress. All legislation to open the area to drilling died the day after the spill.

“Everyone has agreed to put this in deep freeze,” said one industry insider, describing the de facto truce between Washington lawmakers and Alaskan supporters of the oil companies. “In exchange for us not pushing for it to be opened, they won’t push to make it so it won’t be opened forever.”

When North Slope oil production first began to slacken in 1989, a popular bumper sticker read: “Please God, Give Us Another Oil Boom. We Won’t Screw This One Up.” Now, no one finds humor in a hope that has faded like the winter sunlight. Alaskans dread a future of economic decline that has already begun, as the oil hunt moves overseas.

All the big companies have been shrinking their Alaska operations. Los Angeles-based Atlantic Richfield Co., which dug disappointing test wells in Cook Inlet and the Beaufort Sea in recent years, has dramatically cut its Alaskan exploration budget even as it announced new investments overseas, not the least a $1-billion deal in Algeria.

Less and less oil is daily pumped through the Trans-Alaska Pipeline from the North Slope to Valdez. Alyeska Pipeline Service Co., the oil company consortium that operates the pipeline and its Valdez loading terminal, just laid off 70 of its 1,300 employees and says more job cutbacks are coming.

Little Relief in Sight

These are cruel times to a state government 85% dependent on taxes and royalties from oil, and to local governments like Valdez. The state of Alaska spent its last cash reserves in 1993 and is operating at a deficit, which will likely force lawmakers to adopt an income tax. The annual payment to every Alaskan from oil revenues--$900 each, last year--will also likely be capped for the first time.

As less oil is produced on the North Slope, property values at the Valdez terminal decline, eroding the city’s tax base. Last year, Valdez lost more than $1.5 million in terminal taxes, or more than 6% of its annual budget of $24.5 million.

Many ordinary Alaskans are deeply angry at environmentalists and Lower 48 politicians for deciding how Alaskans can exploit the state’s natural resources--particularly the Arctic refuge. And they’re angry at their own leaders because no one has come up with an Alaskan solution.

“Nobody has a crystal ball about how to deal with this, and our state and federal politicians don’t plan for the future,” said Judy Meidinger, an oil industry consultant. “They’re going to leave it to the next generation to figure out.”

In the meantime, however, the government and the oil industry are undeniably better prepared to deal with oil spills--and have created a substantial new oil spill safety industry in Prince William Sound and Cook Inlet. By most accounts, credit goes to the far-reaching federal Oil Pollution Act of 1990, known as OPA 90, that was prompted by the disaster.

“The contingency plan (before the Exxon Valdez spill) was a farce,” said a federal regulator who declined to be identified. “A lot of OPA 90 has been very, very good.”

Safety Regulations

The federal agencies overseeing tanker safety still have their critics. Just last week, the Natural Resources Defense Council and a host of other environmental groups filed suit against the Coast Guard and the National Oceanic and Atmospheric Administration to speed up safety improvements required by the law.

Still, under OPA 90 the Coast Guard now has sharper teeth to oversee tanker activities, and better equipment. In Valdez, for example, the Coast Guard is about to activate a vessel-tracking system that will give duty officers the location within 10 feet of every tanker in the sound. Oil-corralling boom is now stored at the waterline near salmon hatcheries and at other sensitive locations.

Shippers must plan for and practice to contain big spills. Alyeska, the pipeline operator, and one or another large oil company hold major drills twice a year, with smaller unscheduled tests in-between.

On a recent morning, more than 500 emergency workers were part of the most aggressive and elaborate drill that Arco has launched since the Exxon Valdez spill. On one team, two community relations workers and a bush pilot braved rain-blasting winds across Prince William Sound to bring a satellite phone and fax to Tatitlek.

Villagers had tried for days after the Exxon Valdez accident to get a telephone call through to the authorities. Today in a spill they would have direct contact to the emergency operations center in Valdez.

The 1990 federal law also brought the residents of Prince William Sound into the oil-spill picture. During this drill, Tatitlek sent its own well-trained cleanup team to a beach near the simulated oil spill site to help set up pumps, skimmers and oil-containment boom.

“Drills mean a lot to us, to be able to get on top of things,” said village chief Gary P. Kompkoff in his office down the road from the church. In the real thing, he said, “rather than relying on outside personnel, we would have direct reports from village residents.”

Arco spent as much as $400,000 on this cleanup drill. Capt. Jerry A. Aspland, president of Arco Marine Inc., has seen “a tremendous amount of emphasis on response and cleanups in the industry,” particularly because the costs of cleaning up--and the now-common accompanying lawsuits--have soared in the past decade.

“But I have not witnessed as much emphasis on prevention,” he added.

Stephens, the tour boat operator, agrees, noting that even in good conditions, only about 10% of any free oil is recovered.

Stephens is also president of a regional citizens advisory committee created by the 1990 law. These days, he is most concerned about shippers’ crews.

Sailors still get drunk, he pointed out, despite tightened drug and alcohol testing of all oil-industry crews. The Coast Guard recently charged two escort vessel captains with being under the influence of alcohol while on duty. One captain nearly died when he fell into icy Valdez harbor trying to jump between two docked ships at 4 a.m.

“The biggest problem they still haven’t solved,” Stephens said, “is the human element.”