Fuel oil for heating: What determines price in the Bush?

Timely ISER study asks why some villages pay so much more than others

UAA's Institute of Social and Economic Research has conducted a new, timely analysis of why some rural households in Alaska pay up to twice as much for fuel oil for heating as others.

To find a summary of the ISER study, please visit http://www.iser.uaa.alaska.edu/Home/ResearchAreas/fuelcosts2.html .

The research summary, titled "Dollars of Difference: What Affects Fuel Prices Around Alaska?", includes an online interactive map showing such relevant factors of fuel pricing as method and difficulty of fuel transport, distance transported, quantity of fuel per delivery, moorage and unloading equipment and others.

Alaskans who depend on fuel oil to heat their houses and generate electricity have been hit especially hard by the high and still rising cost of oil. Prices for the first fuel deliveries of spring 2008 have already left many Alaskans wondering how they'll pay their higher fuel bills.

But some rural residents pay much more than others--at times 100% more. The costs of buying and refining crude oil are at the base of fuel oil prices. But what other factors make fuel oil so much more expensive in some places than in others?

The new study (by Meghan Wilson, Ben Saylor, Nick Szymoniak, Steve Colt and Ginny Fay) looks at 10 rural communities that reflect all the factors--some obvious and some not so obvious--driving fuel prices around Alaska. The Alaska Energy Authority contracted with ISER to do this research, which the agency hopes can help identify possible ways of holding down future fuel prices. The price information was collected last winter, and fuel oil prices have gone up a lot since then. But the forces and factors that influence fuel prices have not changed. Those include:

• How the fuel is transported and how far
• How difficult it is to reach specific communities, especially on shallow stretches of river
• The number of times the fuel is transferred en route to a community
• Whether a community can get fuel deliveries year-round or just in the summer
• How much fuel is delivered at once and how much a community can store
• The quality of the local moorage and fuel-handling equipment
• Competition among transporters and supplier

Printed copies of the summary are available from ISER in Anchorage, (907) 786-7710. The full report will be available later this summer. For questions about the study, please call Meghan Wilson at (907) 786-5408.

A summary of the report findings and the new interactive map that allows users to see the special circumstances of getting fuel to each of the study communities are available on ISER's Web site. Here once again is the link:
http://www.iser.uaa.alaska.edu/Home/ResearchAreas/fuelcosts2.html