Western Alaska companies say the region should brace for high fuel prices

Companies and communities that buy fuel in bulk could be locked into a higher fuel price for the rest of the year. (Photo by Katie Basile/KYUK)

Russia’s war against Ukraine is pushing crude oil prices up. That means residents of Western Alaska bush communities could see an increase in the price of gas, stove and heating oil. And that price may not come down any time soon.

Mike Poston, marketing director of Vitus Energy, which services much of the Yukon-Kuskokwim Delta, said recent events have driven the price of oil up a wall. He said that soon, customers could be paying up to $1.50 more per gallon compared to last year. He also said the price change will be swift.

“Dramatically, in an instant. It’ll be like flicking the light switch after the barge comes in,” Poston said.

Poston said two factors contributing to that hike are the Russian invasion of Ukraine and the recent federal ban of Russian oil sales in the U.S.

Poston says Vitus will purchase fuel for its first fuel barge shipment to Western Alaska soon. And as fuel prices trend upwards, Poston said customers will be locked in at a higher rate. That’s because many local companies buy from Vitus in bulk, so what they pay up front is the price they’re locked into for the rest of the year.

Poston said that communities on the road system won’t see high prices locked in for as long because those communities buy fuel in smaller amounts and more frequently. Instead, he said, road system gas stations experience shifts in prices at the pumps as market trends change.

Vitus customers can expect to see those high prices reflected in stove and heating oil, as well as in gasoline for the rest of the year. Poston said that key companies that Vitus services in the Yukon-Kuskokwim Delta include many Native corporations, tribes, and businesses.

And Poston said the price hikes won’t just be at the pump. Higher fuel prices also mean more expensive barging and shipping.

“It’s not just the fuel you consume. It’s every other good. Western Alaska is gonna see this, these costs impacted,” said Poston

And fuel price hikes could be reflected in energy bills, too. The Bethel operations manager of Alaska Village Electric Cooperative, Lenny Welch, said all AVEC customers will likely see a price increase.

“The way the war and stuff is going, I can’t imagine it not increasing this summer,” Welch said.

Welch said customers will probably see their bills go up starting in September, and that rate will last until they get a new fuel barge next year. Welch said that AVEC buys from Crowley Fuels at a set rate, so as with Vitus, that price will be locked in.

For customers purchasing fuel from Crowley directly, pricing isn’t as clear cut. A spokesperson from Crowley Fuel said that the price of fuel can still fluctuate after the barges come in. He said that Crowley’s prices are tied to several factors, including inflation and COVID-19.

The higher prices will be especially deeply felt for rural residents, who already pay far more for energy, fuel and food. And those who live in areas where the Power Cost Equalization program is applied will still see their energy prices rise.

At a press conference on March 8, Gov. Mike Dunleavy said the permanent fund dividend check was the best way to mitigate against fuel price hikes in rural Alaska. But that check would be the same for rural and urban Alaskans.

KYUK - Bethel

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