Increased energy prices swelled state coffers in the fall and winter of 2006, while increasing the challenge for Alaska residents trying to keep warm, particularly in rural areas.
A new state report summarizing the effects of fuel prices across Alaska for the fall and winter of 2006 says that while the price of North Slope crude oil declined from $66.06 a barrel on Jan. 30, 2006 to $54.37 on Jan. 30, 2007, rural Alaska communities and households reliant on fuel for heat are still facing high retail fuel prices to meet basic survival needs.
Households in rural communities face current utility costs estimated to be 50 percent higher than in 2000, largely due to increased fuel costs, the report said. “In essence, the people who earn the least (median rural household income) are experiencing the highest fuel prices and subsequent utility cost increases in the entire state,” said the report written for the Alaska Department of Commerce, Community and Economic Development.
Rural communities spend a significantly larger proportion of household income on utilities because diesel fuel is the primary means of generating electricity.
Rural households also bear the burden of the remote nature of their communities and adverse winter weather conditions, which forces communities to plan ahead and purchase large quantities of fuel prior to winter freeze-up. Often those communities do not have the financial capital to purchase large quantities of fuel or are limited by storage capacity. Storage capacity, limited means of transportation, increased cost of transportation and lack of financial capital frequently impede a community's ability to purchase fuel at optimal times or at advantageous prices, the report said.
A case in point is the city of Stebbins, located on the northwest coast of St. Michael Island in Norton Sound, 120 miles southeast of Nome. Fuel for some 596 residents is transported to the island by barge. The state report said that both Tapraq Fuel Co., which retails heating fuel and gasoline, and Ferris General Store, a heating fuel supplier owned by Mayor Robert Ferris, indicated a lack of storage facilities leaves them with inadequate supplies to serve the community through the end of winter.
“The issue in Stebbins is not a financial one,” the report said. “The city has received funds through the Small Municipality Energy Assistance Program and the Municipal Energy Assistance Program, and takes advantage of a special buying program through Norton Sound Economic Development Council.” The problem is simply lack of storage, an issue Ferris said is being addressed by the Denali Commission with plans to redo the entire bulk fuel storage system.
Unalakleet, population about 710, about 148 miles southeast of Nome in Norton Sound, faces a similar problem. Due to the limited capacity of its storage tanks and recent growth in the community, Unalakleet Native Corp., which retails home heating fuel and gasoline, has consistently run short on supplies for residential sale. The Alaska Native corporation expects to have a new bulk fuel farm online by September. Meanwhile, a cooperative arrangement between the city and the Native corporation assures Unalakleet will have sufficient fuel for this winter, the report said.
In response to the cost of fuel in rural Alaska, the state has implemented several assistance programs, providing emergency assistance for municipalities and a state contribution to a federal program that helps low-income households pay for energy.
The full report, posted on the state Department of Commerce, Community and Economic Development Web site, notes that Western Alaska communities had the highest average heating fuel retail price of $4.59 a gallon, while North Slope communities report the lowest average retail price of $1.41 a gallon.
The report notes that the North Slope Borough provides free heating fuel for residential use through village corporations that distribute fuel to borough community residents, charging only a delivery fee on a per gallon basis. The North Slope Borough does not subsidize heating fuel for commercial use, so heating fuel retail prices for commerce is higher than residential-use heating fuel.
To accurately summarize statewide heating fuel prices, it is appropriate to exclude North Slope Borough communities, due to the borough's subsidy for residential-use fuel, the report said.
That said, the report notes that the Henry Hill Store at Sleetmute, in western Alaska, reported the highest retail fuel costs of $7 a gallon. In contrast, Petro Star-Flint Hill in Fairbanks had the lowest heating fuel retail price of $2.25 a gallon. On average, heating fuel retail prices were $3.99 a gallon for 93 communities that reported fuel prices, excluding North Slope communities.
Heating fuel and gasoline prices increased moderately from 2005 to 2006 in communities participating in the survey. The statewide average heating fuel price rose from $3.48 to $3.99 from 2005 to 2006. With the exception of the North Slope region, all Alaska regions experienced price increases ranging from 2 percent in Southeast Alaska to 23 percent in Western Alaska. The North Slope experienced a decrease of 14 percent in fuel costs per gallon, which is likely indicative of the North Slope Borough purchasing and transporting fuel at a lower cost, the report said.
The statewide average gasoline price meanwhile rose from $3.83 a gallon in 2005 to $4.34 in 2006, an average of 13 percent statewide. Regionally the price increases ranged from 4 percent in Southeast Alaska to 21 percent in Western Alaska.
Margaret Bauman can be reached at
margie.bauman@alaskajournal.com.
