Rise in fuel prices anticipated in western Alaska

May 4, 2018

As ice breaks and barges carry fuel into rural Alaskan communities, companies are likely to begin charging prices that reflect global oil prices that have been rising since this fall. 

In the Dillingham small boat harbor, the Vitus marine tug Cavek and barge Avec-208 are being readied to transport fuel from larger barges into the harbor.
Credit Avery Lill/KDLG

Western Alaska is likely to see a jump in fuel prices this month. Vitus Energy, a company that services around 200 communities from the Aleutian chain to the Kotzebue sound, anticipates that consumers will see higher prices by the end of May.

“West coast crude on May first of 2017 was 50.69 a barrel," said director of sales Mike Poston. "On May first of 2018 it’s 72.18 a barrel. For ANS crude the difference amounts to 51 cents a gallon. And refined products are pretty similar to that. And you put sales tax on top of that – it’s pretty significant.”

Bristol Bay Industrial Fuels president and CEO Robert Cox said in an email that world oil prices have risen substantially since BBI received the last shipping in September 2017. The company expects to pay more for fuel this summer, which will then show at the pump. 

Consumers in rural areas are likely to see such a jump in prices because transportation of fuel to rural Alaska occurs mainly during summer months when waterways are free of ice. Most terminal operators store a certain amount of product during the winter, and that allows them to sell fuel at last year’s prices until barges arrive carrying new fuel at current market prices. 

“The price of gasoline at the pump in Anchorage has been going up almost every week all winter long,” said Poston. “The folks in Vitus’s service area haven’t seen those increases. The benefit is that they haven’t had to pay the steadily increasing price every time they go to fuel up. But that does make it more of a shock when it does finally hit.”

Poston cautioned that the rise in fuel prices isn’t guaranteed. But sooner or later, an increase in crude oil prices is typically reflected in consumer’s pocketbooks. 

“As the cost goes up, the price has to go up,” said Poston. “And we don’t know exactly how much that’s going to be. We don’t know exactly the date that’s going to happen. But we just know it’s coming.”

Asked who might experience this price increase, Poston’s answer was simple: every community in western Alaska.

Contact the author at isabelle@kdlg.org or 907-842-5281.