Alaska Fuel Price Projections 2012-2035

Abstract

This and previous Alaska fuel price projections were developed for the Alaska Energy Authority (AEA) for the purpose of estimating the potential benefits and costs of renewable energy projects. Project developers submit applications to AEA for grants awarded under the Alaska Renewable Energy Fund program process. The fuel price projections are not price forecasts but a statistical estimation of potential future utility avoided fuel costs based on the relationships between historic utility fuel prices and crude oil and refinery prices reported by the U.S. Department of Energy, Energy Information Administration (EIA). These statistically estimated relationships are used to project potential future fuel prices based on EIA’s published Annual Energy Outlook crude oil and natural gas price forecasts. In addition to developing these low, medium and high fuel price projections, estimates of the social cost of carbon (previously included as estimates of potential carbon taxes), and a price differential for home heating fuel are provided and are incorporated into the Renewable Energy Fund benefit-cost model for evaluating potential projects. Previously, a five cents premium for low sulfur fuels was added to the projections in anticipation of implementation of low sulfur fuel air quality requirements. However, the low sulfur fuel requirement was implemented in 2010; hence recent prices reflect the effects of the rule and a premium is no longer necessary. The fuel price projections are limited in their applicability to the modeling of project benefits and costs and should not be considered fuel price forecasts.