Villages scramble for heating oil

Early freezeup: heating oil will have to be flown in to villages.

December 12, 2008 

Three villages in the Yukon-Kuskokwim Delta are scrambling to find enough heating oil to last the winter after an early freeze and other obstacles blocked barges hauling in their seasonal fuel.

"I'm sure (fuel) will be flown in," said Bart Agathluk, general manager for the village corporation of Emmonak, a Yup'ik community of around 800 people at the mouth of the Yukon River.

"But it's going to cost like crazy."

It already does.

Fuel costs in Western Alaska rose nearly 50 percent over the past 12 months even as oil and gasoline prices dropped nationwide, according to a state report released this week.

The Emmonak corporation expects to run out of heating oil to sell to local homes by the end of January unless it flies in more fuel at extra cost. That could raise the local price by $3, to more than $11 a gallon, said a former city manager.

The Kuskokwim River villages of Kwethluk and Napaskiak, near Bethel, are in the same boat.

A combination of bad weather, low river depths and -- in Kwethluk's case -- late paperwork, kept the villages from getting their winter shipment in October, said Scott Ruby, deputy director of the state Division of Community and Regional Affairs.

When thick ice clogged the slough into Napaskiak, forcing the barge carrying a winter's worth of heating oil to turn back in October, people panicked.

"The houses were running cold and the businesses were closing their doors," said Phillip Nicholai, general manager of the village corporation. "It was kind of a disaster."

One option for the villages is to ask the state for loans to cover the extra cost of sending in fuel by air -- the only option for Emmonak -- or trucking the fuel across the frozen Kuskokwim River from Bethel later this winter.

Napaskiak flew in 10,000 gallons of heating fuel shortly after the barge turned back. It should be enough to last until the village corporation can bring more fuel by truck but raised local prices by $1.43 per gallon, Nicholai said.

BLOCKED BARGES

On the day the fuel barge was supposed to arrive in Emmonak, around Oct. 20, Agathluk was flying home to the village from Hooper Bay.

"I could see the Bering coast was frozen from Scammon Bay all the way past the Yukon river," he said.

The freezeup came earlier than usual, but the village also expected the fuel barge to arrive earlier in the month, Agathluk said.

A vice president for Crowley Petroleum Services, which delivers the village fuel by barge, said the Kuskokwim ran unusually low this year. Kwethluk, a village of roughly 700 about 12 miles upriver from Bethel, felt the early freeze too.

But the state said financing also factored into Kwethluk's fuel troubles.

Shipping companies that haul heating oil and gasoline around the Alaska coast to hundreds of villages want guarantees they'll get paid before they deliver.

When a barge arrived in late September the Kwethluk village corporation had not finished paperwork on a bank loan it needed to buy winter fuel, according to Crowley and to the state.

The barge dropped off fuel for the local city government, which heats its own buildings but not the village corporation, which sells heating oil to local homes and runs the local power utility.

By the time the village corporation finished the paperwork in mid-October, it was too late for the barge to return, Ruby said.

Employees at the village corporation said the business manager was traveling this week and unavailable for comment.

Kwethluk Mayor David Epchook said it was "plausible" that the corporation had not completed the paperwork on time. Still, he said, "For the most part the village corporation management does well in trying to take care of their business end."

The city has waived its 5 percent sales tax on electricity, heating fuel and gasoline to drive down local costs, Epchook said.

In Napaskiak, about seven miles outside Bethel, a fuel barge turned back after attempting to land in mid-October.

"When we tried to make our delivery, the captain was pushing through ice," said Crowley vice president Craig Tornga.

But the barge usually shows up earlier in the month, said Nicholai, the village corporation general manager.

Instead, he said, "They said they had to take care of their faraway customers first because we're so close to Bethel."

Napaskiak wanted Crowley to cover the cost of flying in fuel since it wasn't able to deliver by barge, but Tornga said buyers sign an agreement saying the company isn't responsible for deliveries thwarted by the weather.

The shipping company considers the early freezeup an act of God.

Village leaders hoped the state would see it that way too.

In Emmonak and Napaskiak they wanted the state to declare a fuel emergency and pay the extra shipping costs. But that's not likely.

The state only declares an emergency in the case of a natural disaster such as a storm destroying village fuel tanks, Ruby said.

An early freezeup doesn't count because the villages could have brought the fuel in earlier and can still fly it in, he said.

'AIRFARE EATS UP SAVINGS'

Alaska North Slope crude oil peaked at $144 per barrel in early July before crashing to about $40 a barrel now.

That doesn't help the many Alaska villages that are locked into high fuel costs because they ordered heating oil by barge this fall at peak prices. The costs won't dip until the next barge arrives in spring.

The villages that missed the winter barge will be able to take advantage of today's lower prices as they fly in fuel, but the added shipping costs could mean higher prices overall.

"The airfare eats up all the savings and then some," said Mike Poston, an executive at Delta Western, which ships fuel to Emmonak.

This in a region with the state's most expensive fuel.

Heating oil costs in Western Alaska rose 48 percent over the past 12 months, according to the state Division of Community and Regional Affairs. In comparison, prices rose 35 percent statewide.

Martin B. Moore is a former state legislator and former Emmonak city manager. The cost of flying fuel into Emmonak could raise the price of heating oil past $11, he said. The for-profit village corporation may reduce its markup to keep the price down.

Next week Gov. Sarah Palin plans to unveil a list of options for Alaska's rural towns and villages showing how much it would cost to build alternative energy projects and wean themselves off diesel fuel.

Yukon River villages are already looking for ways to cut their costs in the meantime.

General managers from nearby villages drove their snowmachines to Emmonak for a meeting Monday afternoon. The topic: creating a new nonprofit co-operative to buy and sell discounted fuel in the region, Agathluk said.

"It's in the talking stages right now and hopefully will become a reality someday soon," he said.

Find Kyle Hopkins online at adn.com/contact/khopkins or call him at 257-4334.

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