‘Pretty dramatic increases’: High fuel prices expected to hit rural Alaska hard

Rural Alaska could be hit hard by high prices for gasoline, diesel and heating oil.
Published: Mar. 9, 2022 at 6:18 PM AKST
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JUNEAU, Alaska (KTUU) - High prices for gasoline, diesel and heating oil are expected to hit rural Alaska hard as communities make bulk fuel purchases.

In Western Alaska, all goods are either delivered by barge or by plane. Fuel surcharges are added to shipping costs and those are projected to shoot up with the higher cost of energy.

The first spring barge is set to come to Western Alaska in two weeks. Mike Poston, director of sales at Vitus Energy, LLC., explained that crude oil prices are 50% higher than they were in June last year.

“The market should plan for increases in energy prices well over $1.50 per gallon higher than last fall,” he said through a prepared statement on March 1.

Eight days later, Vitus Energy said there had been another increase of 54 cents to the price per gallon of diesel and gasoline.

“What we’re seeing is about the time the barges are going to load up and sail out west to begin deliveries, (it) looks like it’s going to be right at the peak of the market,” Poston said. “Or at least, so far, that looks like it’s going to be the peak of the market.”

This price hike is occurring at exactly the wrong time for rural Alaska. Fuel will soon start to be delivered for use in summer. Tribal organizations, village corporations and local governments are also planning bulk fuel purchases that need to be made well in advance of fall deliveries for next winter.

Poston said he’s hearing concern from small communities making fuel orders at these high price points with no sign that they will drop significantly.

“We hear things like, ‘That’s going to blow our budget,’” he said. “We hear things like, ‘Oh my, that’s horrible.’”

Eugene Asicksik, president of the Shaktoolik Native Corp., has been in conversations with members of the Norton Sound Economic Development Corp. about ordering a year’s worth of fuel to be delivered by supertanker to Shaktoolik and nearby communities.

The order is set to be made by the end of the month, Asicksik said. He added that gasoline in Shaktoolik is already selling at $4.96 per gallon with tax.

“The way projections are going, I would say you could just about double that,” he said. For dozens of communities, power bills could increase by 50%.

The Alaska Village Electric Cooperative is the utility for 58 communities across rural Alaska, including the hub community of Bethel. The cooperative burns over 8 million gallons of diesel a year to power those communities.

Bill Stamm, CEO of the cooperative, said it buys fuel futures, a million gallons at a time, to lock in a price for the months ahead.

“We are buying at a fixed rate, in the anticipation that the rates, when we actually need the fuel, will be higher,” he said. “We’ve been doing a little bit of that and watching the crazy market as things go up and down with the cost of fuel recently.”

With the roller coaster in daily oil prices that shot up above $125 a barrel on Tuesday, and back down a little on Wednesday, Stamm stressed that making bulk fuel purchases is a “daily gamble.”

But, there is help out there. The Alaska Department of Commerce, Community and Economic Development has a revolving loan fund for communities with 2,000 or fewer people to help make bulk fuel buys.

The Power Cost Equalization program helps rural Alaska residents pay for their higher energy costs. Curtis Thayer, head of the Alaska Energy Authority, said there are no cash flow problems in getting relief out to eligible Alaskans.

He, too, has been hearing stories from communities grappling with the impacts of higher fuel costs.

“They’re seeing some pretty dramatic increases,” he said.

The House of Representatives is debating whether to pay a $1,300 “energy relief check” in addition to a $1,250 Permanent Fund dividend. Across the Capitol, legislators expect a larger PFD will be paid in 2022 than in recent years.

Gov. Mike Dunleavy spoke about higher fuel prices on Tuesday and their impact on rural Alaska. He said the PFD is the best way to disburse relief.

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