Fairbanks fuel customers react to climbing prices

Some rush to buy before the next increase

Posted: Monday, September 05, 2005

FAIRBANKS - The threat of higher fuel oil prices and winter heating costs have customers rushing to top off tanks.

Dave Teets, president of Fairbanks Fuel, joined drivers making deliveries Friday in response to a frenzy of orders from customers reacting to a spike in fuel costs.

"It's just got to the point everyone wants it before the price goes up," Teets said.

The price of crude oil nationally has crept up consistently over the summer and spiked last week at over $70 per barrel.

Several factors, including increased oil demand in China, instability in Iraq and problems with production accelerated by Hurricane Katrina, could push prices higher.

Heating oil prices around Fairbanks hovered between $2.54 and $2.68 Friday. Those figures are nearly 20 cents higher than just two weeks ago and nearly $1 over this time last year.

Teets, with 18 years in the oil and fuel business, said he has given up trying to explain the fluctuations. He said customers often ask whether they should fill their tanks now or gamble and hope the price goes down before the cold weather arrives.

Dave Lean ordered fuel Wednesday from Fairbanks Fuel.

"Like everybody, I wish I bought it two days before," he said.

His 500-gallon tank had been half full and it cost about $600 to top it off. The money to pay the bill will eat into his household budget, he said. He and other heating oil customers will have to get used to it, he said.

"It won't go back as much as it goes forward," he said. "Something will have to give. I think it's just something someone is going to have to factor into their budget from now on."

Businesses and public institutions also are feeling the squeeze.

Fairbanks North Star School District officials say they may not have budgeted enough for heating costs. Facilities director Dave Ferree said the school district uses about 750,000 gallons of heating fuel in a year, supplied through a contract bid.

The school district budgeted $1.54 million for heating fuel two years ago and $1.2 million last winter, although Ferree said that amount was exceeded. In March, the district budgeted $1.8 million, based on a quoted price for heating oil of $1.85 a gallon.

"But if things keep going the way they are now, that's not going to be enough," he said.

The University of Alaska Fairbanks is not faring much better. Linda Zanazzo, director of facility services, said UAF's total fixed costs are expected to increase by about $2 million, based on current rates. That includes all utilities, including electricity and sewer.

Zanazzo said UAF's main fuel is coal, supplemented by oil and electricity.

"We're burning as much coal as we possibly can," Zanazzo said.

UAF is working with the statewide university system to assess the impact from the other campuses and determine how much in supplemental appropriations the university may have to request from the state.

At Alaska Petroleum, manager Lisa Sundborg described customers as panicked and scared.

"Not everybody can afford to get their tanks filled," she said. "They're just trying to do what they can do."

Teets said he's taken calls from longtime customers and senior citizens, some in tears, because they cannot get current on their account and are worried about heating their homes this winter.

While it may seem a busy week would mean good business for Teets, his profit margin has not increased and he's suffering the same effects his customers are. It costs more to fuel his trucks, and he has to pay the same increased prices to heat his business and home.

He estimates the cost of doing business has doubled.

"We still bear the same problems as everybody else does," he said. "High price of fuel is bad for everybody."

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