Recent oil price increases have brought some cheer to state government, but the rising income is again making Alaskans nervous about heating, electricity and transportation costs. Alaskans aren't seeing anything as high as last year's prices, but energy costs are rising again.
The situation again underscores that Alaska needs cheaper, more stable energy supplies, whether in the form of natural gas, hydroelectric generation, coal, wind, geothermal or other alternatives to oil.
State government finished fiscal 2009 in June with a $250 million surplus, thanks to the higher oil prices. That means the state has more money than expected left in its savings accounts, money it will need to cover the almost inevitable shortfalls in coming years as oil production declines. And the extra income temporarily relieves pressure to cut deeply into state spending, which drives much of Alaska's economy as the government distributes the dollars.
However, that extra income ultimately comes from the average consumer, especially the average Fairbanks resident. For those who are not lined up properly in front of a state slingshot to receive the benefits of higher oil prices, hardship is the result.
Fairbanks is hurt in three ways. High oil prices drive up the cost of electricity, because a good portion of our local generation relies upon oil. Most homes heat with fuel oil. And most vehicles use either diesel or gasoline. These three factors drive other prices up as well, so consumers here feel the pinch quickly when oil prices rise.
The situation is far worse in many of Alaska's villages, where four top officials from the Obama administration visited recently. The costs and conditions in rural Alaska were no doubt startling to the secretaries. The federal officials were able to announce a few more deliveries from the federal slingshot. Those will help some immediate needs. In the end, though, stimulus spending isn't sustainable or up to the challenge.
Alaska - and especially its regions without access to natural gas and 12-months of tidewater - must have more reliable, less expensive energy.