Letter to the Editor
Fuel prices
Published Monday, March 24, 2008
March 16, 2008
To the editor:
So I have an serious question ... what can we do about the already ridiculously high and still rising gas prices? I truly don’t know, but there must be steps that, as consumers, we can take. And let’s be honest — it is not feasible for me, or many Alaskans, to ride a bicycle or walk to work. There is no public transportation where I live and no one to car pool with. So, that being said ...
We have the pipeline in our backyard, and a refinery in North Pole. Is the gas in my tank even from Alaska? Exxon made $11.7 billion in one quarter in 2007? At what point do we say enough? What can I do? Write a politician? Stage a protest? I really don’t know. I would like to, and I would like to do something about it. Does anyone have any realistic ideas or suggestions, a place to start?
I realize I am uneducated about the process and I don’t even know where to start. But I have to start somewhere and thought maybe some of the good folks of Fairbanks might have some input. Thank you for your time.
Community Discussion
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Unfortunately there is not much we can do except increase efficiency in our everyday lives. In theory we are supposed to be able to write to your representative about a complaint and then the law making process starts and some time later there is a result, but we live in the real world and if you want to see how the law making system works look up "VECO". Not all politicians are dishonest but the ones who are eventually will have a say in any legislation. You could organize a protest but the local population is hardly enough to even matter to a huge company like Flint Hills, we could boycott Flint Hills refined products but they mostly produce jet fuel and fuel for the GVEA power plant next door so about all we can boycott is heating oil and diesel, our local gasoline comes from Nikiski
Considering almost everyone in Alaska gets a cut of oil royalties, it seems to me that good economic sense would dictate oil companies raise the prices of petrolium products in order to recover a percentage of the royalties they pay to the state. In addition, pump prices, like anything, are market-driven. Price goes up until demand falls; simple economics can predict the top profit margin.
Remedies? Try driving less; per capita gasoline consumption in Alaska is 461.7 gallons (2004). I dont know if lowering consumption would help much, but a 10% drop would sure get a point across. For a family of 4, that equals ~185 gallons/year, or 3700 miles of driving @ 20 mpg. In addition, its a savings of $650 @ $3.50/gal.
Personally, I advocate breaking the permanent fund; in 2000, lawmakers offered a 50/50 split ammounting to ~$25,000/person. The same family of 4 would have recieved 100 grand to do with as they wish. Even after the Feds took a cut, it ammounted to a HUGE chunk of change. I dont have current figures but Im guessing the fund is at or above 2000 levels; perhaps we should just "take a profit" (say $5000/person or ~10% of the total fund) to help defray rising fuel costs?
Im sure there are other options, but now that Ive tried to kill the faatted calf, I better stop...
One of the factors that I think is being overlooked is the current weakness of the dollar. While it helps sell U.S. products overseas, it also makes imports -- such as crude oil -- more expensive. And since the dollar is pretty much the standard currency of the world oil market, well, you do the math.
Well this is what I am doing.
I have lived in Fairbanks for a little over 18 years. I really have enjoyed living here. I have a pretty damn good job.
Despite having a reasonablly decent job my finances indicate that what reasonable disposable income I had to include the PFD incentive has all gone to the oil companies, leaving only enough funds to purchase food as long as I keep it limited to the essentials.
I have had too dip into my credit on a few occasions to make ends meet.
That was my wake up call when I had to use a credit card to pay for bare essentials (the day I had to pay my heating fuel with a credit card).
I am currently liquidating all of my assests in preperation to pay off all of my debts and to move to a yet to be determined location that entails a moderate year around temperature which will reduce my need for heating fuels.
The current high cost of fuel, the ever rising cost's of commodities due to the rising cost of fuel,Electric rate increases due to fuel, the pressure that local governments will be under to raise more money to pay for fuel (for schools etc),and the inability of my employer to increase wages to compensate (because there fuel expenses have also went up) are just some examples driving me to make this decision to leave.
I don't think I am the only one currently in process of leaving based on what another guy told me (while we were filling up our vehicles).
He said that fuel cost's had made it economical unfeasible for him to continue renting out his duplex for example and that he too was currently selling in preparation to leave.
Before I heard his plight I thought maybe it was just me, that had come to the conclusion, that I would have to leave.
I wonder how many others will be making the mass exodus?
One person posted a comment here a few days ago. I forget the exact words, but the gist of it was, if fuel prices keep going up the way they have been, the only companies that will be in business a year from now will be moving companies.
I thought there was more than a grain of truth in that statement.
I'm right there with you, user6244. I've been looking at the leave option rather closely these days myself. I love the little house I rent. It's an older structure, though, and not energy efficient at all. I go through 100 gallons of heating fuel per month during the colder parts of winter. I see the increased price of oil everywhere - the heating fuel bill, the grocery store, the electric bill, the gasoline station. I make a very decent wage for a single person, but along with my other financial obligations, I've been strained these last few months to make ends meet. The writing's on the wall - I need to lower my overhead in a big way. I want to stay in the house I rent, but it's too small to get a roommate, so, I'm thinking of being someone else's roommate. Or, moving to a dry cabin. But I wonder, what's the break even point? I'd spend less on rent in a cabin, but would probably spend a lot more on gasoline just to get to and from work.
I'm still juggling the options. And one of them is to leave Alaska entirely, because the price of oil is making it harder and harder to afford to live up here. I'm just talking about me, but I get the feeling a lot of people up here are "doing the math" and reaching similar conclusions.
Interesting that you brought up that discussion with the duplex owner. I'd been wondering about the impact of all these individual decisions on the real estate and rental market. If landlords pay for heat, then they will undoubtedly have to raise their rents to offset the increase in oil prices. If landlords don't pay for heat, then they might have to lower rents in order to get or keep tenants that can afford to rent their properties. The thing is, most of the landlords I know don't make much of a profit off their properties, so they'll be constrained in terms of how much they can lower their rents.
It'll be interesting to see how all this plays out in the coming years. All I can say is that the rising price of oil is having real-life consequences that I never even anticipated.
The other day I was joking that I may need to learn the proper Etiquette for wearing a loin cloth and how to make spears and learn where the best locations for cave dwelling are.. LOL
At the rate that fuel cost's are rising and impacting the cost of other commodities and services, that may be the new standard of living..We may have to adjust too...LOL just joking of course..I hope
Anyone have a link on spear making and how to properly wear a loin cloth?
These comments all point to what I have been saying since last fall. We are going to drive the younger generation right out of Alaska as they won't be able to afford to live here. We are retired with a committment to staying in Alaska but over the last several months, we also are considering leaving for warmer climes to reduce our overhead. Watch the housing market when this movement starts to materialize.....probably this summer as people start to actually leave before cold weather starts again.
Alaska should be refining its royalty oil and selling it to bona fide Alaskans at cost instead of selling on the open market. The Permanent Fund is large enough to preserve its principal and still pay a decent annual dividend without future contributions. It was a "rainy day" fund and I think it is getting real wet out there now.
For energy cost comparisons in Fairbanks go to www.fairbanksgas.com for energy saving ideas and alternatives heat sources look at www.fairbanksgas.com/energy .
Last fall I bought a Greenwood wood-fired furnace. I checked my fuel tank yesterday and I have burned a total of 200 gallons since last August. I have saved over 1,000 gallon of heating oil by burning 7 cords of wood. I cut a lot of wood myself for next to nothing and had 3 cords delivered for $180/each. My total saving is over $3,000 at todays prices.
I didn't have $7,000 laying around to buy my new furnace so I got a low interest home improvement loan. The interest on the home improvement loan is even tax deductible. For links to high efficient wood boilers go to www.fairbanksgas.com/energy.
A poll at www.fairbanksgas.com shows that 15% or respondents are leaving Fairbanks within one year. It also shows that 60% are considering leaving if the energy situation does not change! It is up to our local leaders and state legislature to get something started and to do it soon.
There are already people leaving Alaska for purely economic reasons. Not being able to heat their homes is one of the biggies, as far as I can tell.
Only fools price their products to the point that their customers can no longer afford them. Eventually such folly takes a toll on business.
Meanwhile, persons can organize community 'ride boards.' While this doesn't permit as much autonomy in scheduling for travelling in to town, if there are 2-4 neighbors who almost always drive in at the same time, especially to the same/similar area of town, and for similar work-hours, then it cuts the cost to a fraction of what it would be.
I once burned wood only, with no back-up heat. I did it long enough, from youth, into early adulthood, that ten years ago, after we built our home, I stopped burning it for heat; it's not healthy for the respiratory tract, and it's not healthy for community air quality.
But if fuel prices continue rising, and because of both fuel adjustments for electricity, as well as heating oil, then I'll install some room-to-room axial fans for heat distribution, and fire up the wood stove in the basement that I installed for emergencies; 'cause we're approaching an ECONOMIC emergency.
I have a relatively TIGHT, 5-star, very-well-insulated structure. There's folks out there who are burning 4-5 times or more the fuel that we do.
Lastly, send the manufacturers of automobiles and fuel a message. Go to the auto dealer of your choice (if you can still afford to) and buy the best-rated miles-per-gallon vehicle that you can that will still meet your needs. And only drive when you HAVE to.
Make store lists that involve the wqh9ole family's input, and are as all-inclusive of needs as possible, once a week, looking ahead.
Grow your own garden, and either get an energy-star-rated freezer, or a good pressure canner, and lots of cases of jars, lids and bands. Can as much of the veggies and meats that you can for the next Fall, Winter, and Spring. That's partly how many of our grand parents survived difficult economic times, and it's an excellent family activity (both the gardening, and the harvesting and storing).
You CAN tell corporate America to shove off, but it takes some sacrifices.
I'm going to do something that I thought I would never do.......buy a Subaru.
Buying a Subarau is not going to lower the price of heating oil (Diesel). The ever rising cost of Heating oil is a direct reflection of the high usage of Diesel in lower America. We will never see reduced fuel prices again, and I too agree we will see diminshing numbers in our population of the interior in the coming years. Its common day converstaion discussing how darn expensive it is getting to live up here for everyone. Market demand shmarket demand, we are uniqye in which we live in the coldest place for the longest time and we simply are going to get priced out of the game of heating our homes in the coming years.
Try banging your head aginst a brick wall, the results will be about the same. When you can buy a vote from our law makers for $500.00 or less just what do you think you will be the outcome of a few Letters ?? The Roman Empire fell when there were more people worked (?) for the government than supported it. What are the percentages in Alaska right now ? I think you will find it is getting close. Also as long as most labor contracts have a cost of living increase written into the pay raises, who really cares about the cost of fuel? Just those who have to reach deeper into their OWN pockets to pay the differance. Or if you are lucky enough to be like GVEA, just add it to your OWNERS bill. Or better yet join me in Mexico,, no fuel bills here,and public transportion is avaliable for PENNEYS, no real need for gasoline or heating oil.... oh yea the beaches are free also... have a nice cool day..........
3% COLAS aren't even coming close to keeping up with 35% fuel and grocery increases.
Alaska, the Yukon Territory, etc., have nearly always had significant numbers of persons working in government positions over the last 25-35 years. (and no, I don't work for any government).
The significant percentage of the refinery's products in N. Pole is diesel and aircraft fuels. We're competing with the airlines. And greedy, questionable management.
An acquaintance recently spoke with one of the folks in charge at N. Pole's refinery, and asked about the current (economic raping) of Alaskan consumers, via fuel prices. The fellow from Flint Hills is reported to have responded with, "We'll sell our fuel for what ever we want." Akin to the historic, "Let them eat cake.'
Thus, see my previous comment re. 'only fools price their products such that their customers can nolonger afford to buy them.'
There's some fools (and sheisters) among us.
Take the direct approach.
The direct approach is the most energy efficient.
The direct approach is the most honest.
The direct approach is the most equitable for all parties.
The direct approach sidesteps universal parasitic drag caused by rectal polyps [LAWYERS!!!]
Tap-TAPS
The direct approach ---> Drill a 6" hole in TAPS.
..this will be the "transit tax" for traversing the North Star Borough.
Then, build mini-refineries that are sized to the most efficient economies of scale. It's much more efficient and ecological to use many mostly-identical mass produced mini-refineries using the latest technologies.
Keeping up with the Russians...
With the high costs of Bu$holine, after the TEXANS smuggle out all of the hydrocarbons out of Alaska, the Feds will negotiate to sell Alaska back to Russia... the deal will not be done in dollars.
http://www.vostockcapital.com/en/activit...
Can the construction of small and medium-scale refineries effectively address this issue and add enough capacity within the Russian domestic refining sector? According to experts, refinery projects of between 200 kt/yr and 1 million MT/yr or even as high as 2-3 million MT – depending on the region – are the ones estimated to have the best prospects in today's Russia. Within the coming 5-7 years, some 50 to 100 such refineries could be built, which could bring radical changes in the area of national refining. This line of development appears even more promising in the context of the already rapidly increasing number of small and medium-scale refineries being built all over Russia.
===========
A modern mini-oil refinery could be fitted into a 40' conex-box...
mass produce these where materials&labor is affordable and import 100 of them to Fairbanks.
Take back the welcome mat from all who do business with the oil-smugglers until they cough up "more than affordable fuels"..
Cut Them Off..
BOYCOTT!!
no more free 2nd cup of coffee at the cafe for the Texans..
no more Alaskan Hospitality for the Texans..
no more free nookie..
no more free roadside assistance..
no more free advice..
no more friendly smiles..
..Cut 'em off!!
Give them the Cold Shoulder..
that's what they get for laughing behind our backs while we're freezing our fingers off working to help them smuggle our oil from ourselves for 30years.
...flash/rumble
Let's also not forget that Exxon's $11 billion dollar quarterly profit goes to us. I all-to-often hear people claiming that these huge corporate profits (especially in the oil industry) are criminal. Well, then you and me are the perpertrators of this crime. I recently read that 48% of managed mutual funds have holdings in Exxon. This means that our retirment money is growing because of these large profits from Exxon. Government pension funds and even your high yeild savings accounts are partially held up by these 'criminally high profits'. The record profits of oil companies are helping hold up our economy. Exxon is a publicly traded company whose ONLY purpose is to make money for the share holder, and WE are the shareholders (either directly or indirectly). The same is true of other oil companies, and refineries. So before you point the finger at some mythical corporate profiteers, point the finger at yourself.
(I think these high profits and high oil prices are good for us in the long run. We need a major paradigm shift from wanton energy wastefulness to conservation)
I don't care who is making the money. Last time I checked my account had more going out then coming in so it wasn't me and as far as that profit from the PFD I basically just handed it right back to the oil companies, paid the federal government taxes for having it pass through my hands and the collective or State if you will, will spend the rest of the gains on pet projects, other misc. services, only but a few provide any true benefit such as troopers and road maintenance for example.
Any way all the lofty ideas of alternative energy, adding refineries, drilling seem to be far off in the future and will not staff off the bleeding that is occuring now. By the time any of those idea come to frutation there may not be much blood available to revive the victims..
I've been in AK since 76, I'm relatively young, I'm not going anywhere. This is my home, I choose to stay regardless.
Something that I do not understand is why Alaska does not have its own refineries. The permanent fund is an account that belongs to the people of Alaska and there is over $37,000,000,000 in there. It seems like a good way to use that money would be to build a refinery and then use our royalty oil and refine products for use in Alaska and create some competition for Flint hills and tesoro. It is ridiculous that Flint Hills is using Alaska royalty oil which is bought at a price below market, and then does not discount the refined products locally. All flint hills produces is jet fuel and diesel so according to supply and demand then heating oil prices should be much lower but since Flint Hills has a monopoly north of the Alaska range they can basically charge whatever they want, if we dont want to pay $4/gal for heating oil your only choices are to either leave or buy a good chainsaw.
Another use for the permanent fund could be to build our own natural gas pipeline. The state could tell the oil companies to pack sand, we build our own ALL ALASKA gas pipeline to supply Alaska residents and then either sell the excess on the open market.
Quit complaining, pass the fur-hat around town...
GITTER DONE !!!
For as much dough as it costs to pay the winners of the Nenana Ice Classic...
You can afford to build your own mini-refinery in Fairbanks..
and while you're at it build several of them----->>>
http://www.chemexinc.com/600_bpd.html
Introductory Information
Val Verde specializes in building skid mounted modular crude oil refineries that process from 15,000 to 600,000 metric tons (300 to 12,000 bpd) of crude oil per year. Chemex, Inc. purchased the Val Verde modular refinery design in the late 1990’s.
The basic crude oil atmospheric distillation unit (ADU) produces LSR, naphtha, diesel and residuum. Additional processing units can be supplied by Val Verde that are capable of producing specification high-octane motor fuel, commercial jet fuel, kerosene, winter and summer diesel, fuel oil and asphalt. Two or more plants can be installed on a single site allowing the simultaneous processing of more than one type of crude oil and one plant can still be in operation in the event that one plant is down. The plant sizes can be increased in stages.
Val Verde’s basic, small ADU plants:
* can be set up and be in operation within several days after arrival at a fully-prepared and completed site,
* allow a single operator to restart the plant from a cold start in less than one hour and have the plant in full operation,
* are completely automated and once an operator sets all the controlling points, all product temperatures and flows are controlled automatically. If a product specification drifts off, or if a potentially hazardous condition develops, the plant automatically turns itself off to a safe condition without the help of an operator. A “First Out” annunciator signals the reason for the shutdown by a flashing red light,
* require only a flat support area or concrete slab, and
* require no water, steam, instrument air or external fuel supply.
Val Verde designs and builds the following additional equipment for its distillation units:
* special alloy construction for processing high sulfur crudes,
* desalter packages for removing salt from the crude for corrosion prevention,
* naphtha, jet fuel and diesel hydrotreaters for sulfur removal from the products,
* catalytic reformers for producing high octane gasoline motor fuels,
* gasoline stabilizers for reducing the Reid vapor pressure of gasoline,
* vacuum distillation units for producing paving grade asphalt (bitumen),
* sulfur plants for sulfur conversion and air emissions reduction that include an amine plant, a sulfur plant and a tail gas plant,
* winterized skids for operation in artic weather, and
* portable laboratory and control buildings with supplies.
We can blame Flint Hills to some extent, but the State of Alaska is who we really need to blame for current heating oil prices. Flint Hills buys their crude from the State at full market value, minus transportation tariffs, which at $100/bbl equals $2.38/g. In October when crude was at $85/bbl, Flint Hill's check to the State was $126,965,588.42. You can see the complete invoice at http://fairbanksgas.com/INV_FHR102007fin...
At todays prices the State is getting over $150 million dollars a month from Flint Hills! There is no mystery where the State's sudden $10 billion dollar budget surplus is coming from! It is coming from you and me in our heating and electric bill. Southcentral Alaska is laughing at us as they pay 1/3 as much for natural gas and 1/2 as much for electricity. The joke is on us and no one here is laughing.
Saying the Exxon profits come to us is just another greedy Alaskans misinterpretation of the math to justify keeping the oil companies here and to keep getting their yearly PFD. User6244 is right -- check your checkbook. Also, saying that BP or Exxon has to *raise* its rates to cover the cost of what it has to pay AK by contract for the right to take AK's oil, especially considering the amount of profit they're making, is ridiculous! All I see are oil companies cutting corners to minimize their overhead and then complaining about fines when their shotty maintenance causes leaks.
What can we do -- very little. I already own a 5 star plus home and ensure I've replaced all incandescents with CF bulbs. I've plugged every leak I can find, turn off things when not in use, use candles instead of the overhead light when taking a bath, Reduce my driving to the bare minimum, keep the cars in as good a running condition as I can including regular oil changes (not to mention checking that tire pressure), yadd, yadda, yadda. The result -- my monthly costs keep increasing due to the increasing costs of everything I cannot manage.
The best suggestion I've heard yet is the one about a one-time payout of the PFD. If the people were no longer getting their yearly checks let's see how long they keep supporting the oil industry's tactics!
Many responses on this thread show a lack of financial, economic and geopolitical knowledge. Some just show stupidity(i.e. "busholine"). We have a perfect storm of circumstances in action right now. The markets are driven by an ever increasing demand led by China and India. They are driven by fears of supply disruption from unstable suppliers, Iran, Iraq, Venezuela, Nigeria and others. Fear of US dollar declines, production and distribution bottlenecks and possible terrorist activity along with traders who are betting on further problems all drive up prices. Solve these problems and prices would plunge but I don't see this as happening anytime soon.
We also suffer from politicians grandstanding for gullible voters. Do you think ExxonMobile is making excessive profits? Personally I do not. The company was created by merging Exxon and Mobile, both huge companies by themselves, why would the combination not be even larger? There are something like 6 billion shares outstanding, each share earning $7.28 a year(Google earns $13.50). The price is about 12 times earnings(Google 35x). The average stock is selling for 16 times earnings so Exxon should have a price around $115 a share but it does not, it is about $86 a share(and only $72 within the last year). Why is it so cheap? Because it is not where investors think their money will grow into the future. The company has a profit margin of about 11%. If you put $200,000 into your new business and made $22,000 a year you would not feel like you were making a lot of money on your investment and you would NOT be making a lot. You also would not have Venezuela seizing your assets and American politicians saying you should pay extra taxes because your profits were so obscene.
Who is Exxon? All insiders combined own less than 1/10 of 1%, no one investor owns even 5%. 54% of the company is owned by mutual funds or institutional investors which means if you have a pension or 401k, YOU DO! If YOU think it is making so much money YOU should be buying the stock for yourself. You don't even have to go to a stock broker, you can buy directly from the company.
On a personal note, what can you do to cut your costs? We do not roar away from one stoplight just so we can brake hard at the next one. We do not keep our vehicle running in the parking lot while we spend 40 minutes inside the store. We plug in our vehicles an hour before we leave, not the night before. We set our thermostat at 60 degrees not 76. We don't live in a 1500-2500-3500 square foot house even though we could and we have used 120 gallons of fuel oil since filling in September. We spend less for fuel now than we did 2 years ago even with the price increases.
If costs are making you think of leaving you might want to do some research first. Family in PA and MD are paying $400+ a month to heat and friends in Vegas have $400+ a month air conditioning bills.
Many of us are not what is commonly referred to as indirect shareholders in the oil monopolies.
I have no 401K or other substantial investment plans, and the last time I looked at a variety of average savings account interest rates in the local banks, AFTER Bernanke started rapidly increasing the prime rate, simple savings plans were still only paying 1.5-1.9% interest rates; pathetic, though laughable.
Someone may be making Big Money from the oil companies, but it ain't the average consumer with no 401K.
And yes, every time there's a turf war, or mumbling about invading yet another country, the oil prices jump notably. (Odd that every time GeeDubya mutters something with the inflections of excess testosterone involving international politics these days, his RNC-contributing buddies get wealthier, and we get less discretionary spending money..
That's not to dismiss China's and India's increased consumption, but the Shrubmeister and his policies have had a DEFINITE negative affect on the average consumer of energy.
Your right I should just buckle down for the ride.
But do you really think that the oil company or my mortgage company will wait till I have enough money to pay or will they foreclose or place a lean first and just give me the "sorry it's just business" ,crap.
I can do without AC (plenty of water to cool off with) that translates to +400 dollars a month for me, the place I am intending on living doesnt require heat thats another +400 to +500 dollars A month for me, since the average temp is 84 all year around.
I can also maintain a garden all year long (even more savings 200 are year or more, maybe?). The place of work is so close that I may be able walk or if the property I have an eye on is farther away it still no more than 15 miles at best to work (that's even more savings. Even if the cost of other goods and services are higher I think the move will be positive, and a new adventure..
Remember that Alaska has a lot of land mass an