Components of Delivered Fuel Prices in Alaska

Abstract

This is a systematic analysis of components of delivered fuel prices in Alaska. Data for the analysis include limited publicly available Alaska fuel prices (fall 2007 prices), as well as information the authors gathered from extensive interviews with fuel retailers and transporters, communities, and agencies. We identify the individual components of delivered fuel costs—including world price of crude oil, refining costs, transportation costs, storage and distribution costs, taxes and financing costs—and investigate how these factors influence the final retail prices of home heating fuel and gasoline. Transportation, storage, and distribution costs appear to be the most variable factors driving the large retail fuel price differentials among Alaska communities. Therefore, we investigate how factors such as seasonal icing, the number of fuel transfers enroute to specific communities, local storage and delivery infrastructure, marine and river characteristics, and distance from refineries or fuel hubs influence fuel prices. We did an in-depth analysis of how those factors influence prices in ten case study communities around the state—Allakaket/Alatna, Angoon, Bethel, Chitina, False Pass, Fort Yukon, Lime Village, Mountain Village, Unalakleet, and Yakutat. Together, the quantitative data and information on Alaska fuel logistics provide a comprehensive analysis of Alaska’s fuel prices.