Vitus Energy and AVEC say Western Alaska should brace itself for high fuel and energy prices
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.
The Russia-Ukraine war has already touched the lives of Americans. And soon, effects of that war could be seen in fuel prices in the Yukon-Kuskokwim Delta and other parts of rural Western Alaska.
Mike Poston, marketing director of Vitus Energy (Vitus), which services much of the Y-K Delta, said that recent events have driven the price of oil up the wall. He said that soon, customers could be paying up to $1.50 more per gallon compared to last year. He also said that the price change will be swift.
“Dramatically, in an instant. It'll be like flicking the light switch after the barge comes in,” said Poston.
Poston said that 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 said that Vitus will purchase fuel for its first fuel barge shipment to Western Alaska soon. And as fuel prices trend upwards, he said that Vitus and its 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 fixed high prices for as long, since 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 the 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. But Poston said that price hikes don’t stop 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 (AVEC), Lenny Welch, said that 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,” said Welch.
Welch said that 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 its fuel from Crowley Fuel 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. That’s what drove this week’s sharp increase in Crowley fuel prices. The spokesperson said it went up by either $0.25 or $0.30 per gallon depending on fuel type.
These higher prices will be especially deeply felt for rural residents, who pay exponentially more for energy, fuel, and food. Those who live in areas where the Power Cost Equalization program is applied will still see their energy prices rise.
In a press conference on March 8, Gov. Mike Dunleavy said that the best way to mitigate against these fuel price hikes in rural Alaska is with a permanent fund dividend check. That check would be the same for rural and urban Alaskans alike.