Anchorage Daily News

PALMER -- It's easy to complain about prices at the pump these days.

It's even easier in the Matanuska-Susitna Borough.

Per gallon, the cost of regular unleaded gasoline here runs at least 10 cents higher than in Anchorage.

The difference in price baffles people who live as little as 45 minutes from the big city.

"I can't believe that it costs 10 cents a gallon to truck gasoline out here to the Valley, so therefore I do believe they're kind of taking advantage of the situation," said Palmer resident Curtis Mueller. "Since I'm retired now and I don't get into Anchorage every day, we buy our gas out here and we do actually try to hold our driving down some."

By mid-March, the national average price per gallon of regular unleaded gasoline had risen to a new high, according to the Energy Information Administration.

By Friday, the cheapest gas in the Valley hovered around $3.35 a gallon at Three Bears and the Palmer Chevron at Evergreen Avenue. That's 19 cents more than the cheapest in Anchorage: $3.16 at the Dimond Boulevard Costco, according to gasbuddy.com, a Minneapolis-based Web site that tracks prices based on local reports.

The reason? Depends on who you ask.

Producers blame transportation costs. Retail gasoline in Alaska comes mostly from Tesoro Alaska, with a small share from the Flint Hills Resources Alaska refinery in North Pole and a small amount imported from the Lower 48.

Tesoro operates a refinery in Nikiski, where the company processes crude from the North Slope and Cook Inlet, but also from far-flung producers in places like Nigeria, Russia, Norway or Indonesia, said Kip Knudson, an Anchorage-based external affairs manager for the company.

From Nikiski, Tesoro pipes refined gasoline beneath Turnagain Arm to a distribution hub at the Port of Anchorage. Distributors fill trucks that service retail stations.

"Simple mathematics, it's less expensive to deliver gas to C Street and Northern Lights than it is to downtown Wasilla," Knudson said.

It's "plausible" that paying somebody to drive a tanker truck to, say, Meadow Lakes, plus the cost of the truck and the fuel to get it there could reasonably tack a dime or more to the cost of a gallon, said Steve Colt, an economist at the Institute of Social and Economic Research at the University of Alaska Anchorage.

Anchorage gas stations also tend to clump together in clusters, keeping the level of competition high. In the far-flung communities of the Mat-Su, there are fewer stations, farther apart.

"When there are fewer gasoline suppliers in the area, prices tend to be higher than a place where there are a lot of competitors in close proximity," said Laurie Falter, an oil industry economist with the Energy Information Administration.

One gas station owner in Palmer blamed the locally high prices on the state gas tax while declining further comment.

The state levies an 8-cents-per-gallon motor fuels tax on fuel distributors, who pass the cost along to retailers, who pass it to customers. The Mat-Su Borough has no gas tax. The cities of Wasilla, Palmer and Houston have sales taxes that do apply to gasoline.

Alaska's state gas tax is the lowest in the country, according to Johanna Bales, with the state tax division. And the gas tax hits everybody about the same.

"It wouldn't even make a difference between Mat-Su and Anchorage," Bales said. "So obviously it's something else."

Curtis Mueller channeled his frustration into a photograph of Lutzi, his 4-year-old border collie, harnessed to a big Ford pickup and straining toward a can of dog food dangling just out of reach.

He titled his photo, "How Alaskans cope with high gasoline prices."

Find Zaz Hollander online at adn.com/contact/zhollander or call 352-6711.

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