Thursday, July 10, 2008

Rural Alaska's Uncertain Future

When I ask you what you see in this picture you would most like say "I see a gas pump". When you ask me what I see in this picture I would say "I see the slow death of rural Alaska."

The first gas barge of the shipping season has arrived and the price of fuel for the first shipment has been set. The price at the pump is now $7.25 a gallon.

Crowley Monopoly Maritime Services is the only supplier of petroleum products to Kotzebue and therefore to most of the Northwest Arctic Borough of Alaska. We get our gas barged up once at the beginning of the summer and once at the end of the summer.

The gas is stored at Crowley's tank farm that you can see in the lower right hand side of this picture. That means that even though the price of fuel was already raised with this first barge shipment, the chances are when the second fuel barge arrives the price will be raised again.

The price at the pump is always more than the price at which you can buy fuel in bulk directly from Crowley. Prior to this first shipment gas was $4.20 a gallon and heating oil was $4.33 a gallon for a minimum of 53 gallons purchased. Before the barge came the price at the pump was around $5.50 to $5.70 a gallon depending on which store you went to. After the barge arrived Crowley increased their bulk fuel price to $5.80 a gallon for gas and $6.09 for heating oil. So basically it's $305 for 53 gallon drum of gas BEFORE taxes. That same drum filled at the pumps at the store pictured would be $384.25.

In addition to the increased price of gas and the more devastating increase in price of heating fuel locally here in Kotzebue is the increase of fuel prices that is affecting all of the United States and particularly Alaska. That increase is being reflected in the cost of food here at the stores. As I stated in an earlier post milk is $10.49 a gallon. A "cheap" loaf of bread is almost $3, 5lbs of potatoes is $7.99. We eat a lot of subsistence foods around here but that all takes gas to go out and get, and no one eats only caribou, fish, and seal anymore.

When I really sit down and think about it, I fear for the future of rural Alaska. If the price of fuel keeps increasing people are not going to be able to afford to buy food and heat their houses. I don't know about anyone else, but I my pay scale is not increasing to match the increased cost of living. The poor are going to be the hardest hit first. If things continue the way they are there is going to be a mass exodus of low income people out of rural Alaska and into the more metro areas such as Fairbanks and Anchorage.....and those areas just aren't going to have the infrastructure to handle such an influx of people. A crisis is looming around the corner waiting for the first cold snap of winter to rear it's ugly head.


Karen Travels said...

Yikes. Wow. Gas is 4.05 here in Charlotte, but only 3.89 in surrounding areas.

I know Anchorage is not as expensive, but still, with a 4,300 miles trip there and rising airline tickets...I wonder if I picked a bad time to go there!! My mom told me no one will be able to affrod to visit me!

KC said...

Fairbanks is set up for a disaster. Our fuel is slightly cheaper, but not much else is going its way. It's not hyperbole when the assembly says that town's in danger of getting crushed by the `trifecta` of rural migration, fuel and the price of food (buoyed a lot by the Canadian Dollar).

It's a scary thought that some people are hoping enough people flee Fairbanks to make room for the people fleeing the bush. Is that what this' come to?

Anchorage, naturally, doesn't care. Not their posteriors freezing come winter. It's enough to make me have an aneurysm.

Grace said...

Doesn't the crude oil get pumped up only a few hundred miles from you guys? Why do they have to ship it all the way down to "who knows where" and then ship it all the way back up?

If I were paying outrageous prices for something that was being dug up from my backyard, I would be pissed.

By the way, I live in Chicago which has the highest gas in the nation. A gallon is about 4.65 right now.

Ishmael said...

Yes, the future of many places in rural Alaska is endangered.

Grace asks about the pricing structure... I used to live in Soldotna, and just up the road was the Tesoro refinery, which made gasoline out of Cook Inlet crude. There was also a Tesoro To Go quickimart kinda place exactly one mile from the refinery. The price was higher there than it was 100 miles south in Homer at the Tesoro To Go.

Despite the proximity to the refinery, the gasoline was sent by pipeline to Anchorage, about 75 miles away as the crow flies, and then trucked back 150 miles down the Seward/Sterling highways to that nearby quickimart. It was cheaper in Homer because the gas was barged there from Anchorage.

Go figure.

And Grace, your gas is expensive, but it's more so up here, and we're in "the nation." But we understand when you Lower 48ers say that, and we don't mind. Much. Just enough to point it out. :-)

Conchscooter said...

You will read similar sentiments in Saudi Arabia and Canada because high oil prices benefit the corporations and their dependant States, not the people. When someone says "only $3.89" in the US about a gallon of gas you know $4 is the new comfort level and the gas companies know it. No matter how hard we pump our Iraqi colony's oil supplies we will never see $2 a gallon again (in the Lower 48)because they know we will pay $4 a gallon at least. Cheap gas subsidies for a Modern Lifestyle are gone for good.Rural Alaska? Fascinating idea but whale oil lamps are so 19th century...

Karen Travels said...

First of all, don't forget Alaska is part of the nation, so Chicago obviously doesn't have the most expensive gas in the nation. As for the lower 48, gas is 5.67 in Lake Powell, UT today.

And second, just becuase I said gas is "only 3.89" doesn't mean I am happy to pay for it. And I know a lot of people who won't pay for it. The fact that gas companies see us paying for it now and will forever keep it that high based on the fact we are paying for it now is absurd. Simply absurd.

Conchscooter said...

I wish it were absurd. Peak Oil trumps all our hopes.

Deb said...

You mentioned that milk is over 10 dollars in's the same here in Valdez. We do get our supplies trucked in from Anchorage. It just went up in the last few months. Unreal! deb

Tracy said...

I'm reading this several months later and we DO have gas around $2 again (In TX where it tends to be on the cheaper end) Won't the price go way back down this summer now that prices are much lower than last year?