A new player with deep Alaska roots has entered the fuel-deliverybusiness in Western Alaska, bringing a rare shot of competition toa rugged edge of the state marked by fuel prices that rank amongthe nation’s highest. Imagine paying more than $7 a gallon for gasoline , as some villages did this year. And that’s when things go right. When things go wrong and emergencyfuel shipments must dribble in by plane, instead of arriving atonce by river barge, gas prices soar toward $10 a gallon . Villagers have long clamored for a new fuel shipper, hoping priceswould fall in the vast region extending from the Aleutian Islandsto Bristol Bay to Northwest Alaska, a seaboard longer than theLower 48 West Coast.
How much difference a new company will make has yet to be seen. Theworld first heard of Vitus Marine this winter when it hired a Russian icebreaker to deliver South Korean fuel to ice-locked Nome in western Alaska. Now the upstart is having a quiet but critical impact throughoutthe region, where it’s quickly elbowed its way into a high-riskmarket long dominated by two goliaths with much more money and muchbigger fleets: Florida-based Crowley Marine and Seattle-based Delta Western . Transportation component falls Some say the new company, Vitus Marine, has forced the competitionto reduce its bids to big fuel buyers.
To lower those bids,companies lower the transportation fees they tack onto fuelpurchased from refineries. Those savings won’t be easily noticedthis summer by villagers, who can expect to see higher pricesagain. Vitus, based in an Anchorage strip mall, began delivering fuel andcargo late last summer before rivers froze shut. Critical to thefirm’s success is a long-term contract with one big buyer, the Alaska Village Electric Cooperative , which secured the capital to pay the upfront costs of the twotug-and-barge sets operated by Vitus. CCTV Box Cameras
The cooperative’s delivery contract with Vitus, involving about 5million gallons of fuel, has shuffled the industry, said Bob Cox, avice president with Crowley Marine’s Anchorage offices. “(The partnership) took a lot of gallons off the table and DeltaWestern and Crowley are looking at the rest of market and seeingwhere we want to be,” he said. Rural fuel costs to rise Rural fuel costs never seem to decline, and this year may be nodifferent. Villages buy their fuel in bulk during the months that riversaren’t frozen, so they’re usually chained to one price for theentire year. The global cost of crude oil is the biggest component of thoseprices. HD-SDI Camera
This summer, that global index has fallen. But rural fuelprices will nonetheless rise. That’s because the Northwestern U.S.and Alaska have been hit by higher prices due to temporaryshutdowns at West Coast refineries. Scheduled maintenance at theTesoro refinery in Nikiski two weeks ago also limited capacity,said Cox. China CCTV Box Cameras
The effects are visible at Anchorage gas stations, where pricesrecently surged past $4.50 a gallon, more than 50 cents higher thanlast fall. Rural Alaska can expect much the same, said Kirk Payne, a vicepresident with Delta Western in Anchorage. “Look at the cost of gasoline at Chevron in Anchorage this yearversus last year, and that is indicative of what will happen inrural Alaska,” he said. Rugged world of Alaska deliveries Also affecting rural Alaska fuel prices: It’s one of the toughestplaces in the world to operate, according to Payne. Bad weather,shifting sandbars and raw infrastructure mean everyone faces bighazards that can lead to unexpected costs.
By comparison, consider state-of-the-art docks in places such asSan Francisco, where fuel deliveries don’t require leaving the boatbecause pipelines come to the water, Payne said.