Cost of oil hits Alaska's villages hard

BARROW, Alaska — A gallon of unleaded gasoline: $10. Heating fuel: $9.10 a gallon. Electricity: $1.17 per kilowatt hour — 11 times the national average.

Some heavily taxed European nation or a time in the future when global fossil fuels have grown dangerously sparse?

Try right now in the most remote villages of America's 49th state.

Soaring oil prices that swelled Alaska's treasury have come back to slam the state, particularly its 170 rural villages.

Gov. Sarah Palin has proposed checks of $1,200 for each resident to help relieve some of the burden using a surplus from the oil-rich state treasury. Lawmakers are debating that proposal right now.

But in far-flung villages, the people expect things to get much worse. The seasonal barge shipments of fuel have yet to arrive, meaning villages are still paying last year's prices, already a minimum of 60 cents higher than the U.S. average.

Here in Barrow, the nation's northernmost city that lies just a few hundred miles west of the country's largest oil field, Prudhoe Bay, residents pay $4.65 for a gallon of gas. When the barges come, that price tag will be closer to $7.

"I'm tired of everyone else harping on $4 a gallon for gas," said longtime Barrow resident Marvin Olson. "We've been paying that for four years when everybody else was paying $2 a gallon."

High costs are hardly new for many of these villages, but the situation is becoming dire and some are fleeing for larger areas.

There are more darkened apartments, abandoned ahead of the coming winter when minus 50 will be considered a nice day. Villages are trying to figure out how they will pay for enough fuel to make it to summer.

The season's first snow in some areas is barely two months away.

Alaskans in rural areas will spend 40 percent of their annual income on energy this winter compared with 4 percent for the average Alaska household, according to a University of Alaska Anchorage study published in May.

Alaska is largely roadless, and essential supplies that arrive by barge or airplane will also cost much more.

The Legislature is considering several lifelines, including Palin's proposed relief checks.

This would be on top of the annual oil-revenue dividends most residents already receive. Last year's Permanent Fund Dividend check was $1,654; this year's projections are close to $2,000.

Palin and some lawmakers said on a recent trip to Barrow that they have tired of the suggestion that Alaska gets more than its share at the federal trough.

Alaska received $1.84 in federal spending for every $1 the state paid in taxes to Washington, according to the Tax Foundation, a nonpartisan organization. The state ranked third, behind New Mexico and Mississippi in 2005, the last year figures were available.

"We are taking care of the challenges we have in Alaska on our own," Palin said.

Access to fuel in Alaska can be a matter of survival.

Boats and four-wheelers are used not for sport, but to hunt. Besides food, hides are used for clothing and to line whaling boats.

The Inupiaq Eskimo whaling community of 4,000 residents, like generations before them, rely on the land and sea to survive.

Animal hides hang from lines. Armed hunters troll the Arctic Ocean looking for bearded seals, locally known as oooguruk. Off-road vehicles return home weighed down with a fresh-caught caribou.

There are ceremonies in the center of town to celebrate a successful hunt for bowhead whale. The captain of the boat is obliged to share his bounty with others in the community.

At a grocery store two blocks from where the ceremonies are held, a loaf of bread goes for $6; a gallon of milk, $10; a dozen eggs, $4.60; a pound of strawberries, $10; a half-pound of lunch meat is $7.

"If we had to go to the store and buy everything, we'd probably be on food stamps by now if we didn't have our land and sea animals," said North Slope Borough Mayor Edward Itta. "More and more our take home pay is going to be spent buying gas to go get caribou, to go get fish, to go to our camps and gather our food."

Fuel-driven changes to tradition are already spreading through parts of the state.

Henry Horner lives 300 miles southwest of Barrow in the village of Kobuk. He fears gas could reach $12 a gallon by the fall hunting season.

"Normally I run into six or more boats on the water this time," he said. "Where I went on the Kobuk, I was the only one there. I'm still wondering how many of us will be able to go hunting moose and caribou this year."

Barrow is better off than many Alaskan villages. The community gets subsidized natural gas from nearby fields. It's benefited from oil-field property taxes that have helped build new schools and municipal buildings these last two decades.

The wait for Barrow's next fuel-barge shipment in about a month, usually a time of relief, is now a source of growing angst, knowing gas for the next year could be in the $7 to $8 a gallon range.

Said Barrow whaling captain Jacob Adams: "We could be going back to dog teams if we can't afford the cost of gas for subsistence hunting."