Alaska editorial: Savings on fuel tax suspension add up to common sense

Posted: Sunday, March 14, 2010

On average, Alaskans pay a lot more for the same goods and services others get. According to a 2008 study, a family of four in Alaska would need at least 9.7 percent more income to keep the same standard of living as the average U.S. community, says workforce support company Runzheimer International. 2008, coincidentally, was the last year Alaska's motor fuel tax was suspended.

Since 2008, life for anyone trying to support a family of four, or any other number of folks, has become harder. Unemployment, according to the state, was at 9 percent at the end of last year, a 1.4 percent increase in the seasonally adjusted rate from 12 months earlier.

Gov. Sean Parnell is proposing that the tax - 8 cents for gasoline, 5 cents for watercraft fuel and 4.7 cents for aviation fuel - be suspended again, starting this July, for two years. The state's overall economic climate suggests that would be helpful, even though according to Senate President Gary Stevens, lawmakers aren't interested and the bill appears stalled.

Although the price of a barrel of oil or a gallon of gasoline is down from the record highs of 2008, what consumers pay, especially in rural Alaska, remains high. In Barrow, gasoline is $4.25 a gallon, according to a January survey by the state Division of Community and Regional Affairs. In Bethel, the price was $5.03. Dutch Harbor is paying $3.31 a gallon. Dillingham's cost is $4.64. And Cordova shells out $3.88.

But nowhere is gasoline higher in Alaska than Arctic Village. Drivers there paid $10 a gallon in January. That's compared to $9 a gallon in October 2008, when the tax suspension was in effect.

Joe Klejka, who lives in Bethel, says a few cents less for a gallon of fuel doesn't seem like much. Nevertheless, this month will be tough for his family, even though as mayor he says he is better off financially than many who live in his hub city. So every penny saved these days is earned, and valued.

Wilfred Ryan Jr., who operates longtime air transport company Ryan Air, would like to be able to count on more fuel savings. Right now, the carrier, which moves goods from Cape Lisburne to Platinum and all points in between, is still burning higher-priced fuel purchased last fall in combination with other fuel at a cost between $5.85 and $6.92 a gallon. Once he's able to purchase new fuel at a lower price, Ryan says he could pass on the savings to his customers.

Sarah James buys her fuel in Arctic Village. She'd like to pay less, and she wonders what good an 8-cent discount would make. James would rather see something invested into renewable resource development than a tax break.

And the governor agrees that more is needed.

"It is important to note that while the motor fuel tax suspension program would provide temporary assistance, we still need to work together to seek long term solutions to the energy cost issues facing us," Parnell wrote in a letter to the speaker of the House in Juneau advocating for the tax suspension.

The proposal, which would put about $40 million a year back into consumers' pockets, is intended to be temporary. Alaskans have been through this before from September 2008 through August 2009, and the state's transportation needs were met without the tax revenue. Ultimately, the money will still stay in the state and make a difference in everyday lives.

Some say a better solution for rural Alaska is to focus on stabilizing fuel prices with increased storage and the capability to lock in purchases when prices are low. But organizations like the Denali Commission, the creator of most fuel storage opportunities in the Bush, face uncertain federal funding scenarios this year. Is it realistic to talk about increased storage now?

Perhaps it's better to save a few pennies today, and still keep an eye on bigger solutions for the future.

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