While the average price for a barrel of oil was $77.40 in November, after the first week of December it was spotted around $65 a barrel. There’s been about a 16% drop (though the December amount is one static price and not an average over 30 or so). For argument sake, taking the 16% at this point, will gas prices drop that much? No. Due to ‘game theory’, gas dealers are ready and willing to jump in and follow increases of crude with higher gas prices before their competitors – yet when oil drops, they tend to hold back and see what the other dealers will do. There are some other cost factors, but by and large it is the competitive nature of salesmen that are determining your short run gas prices!
In Alaska, our prices are not even comparable to other locations though gasoline and its production costs are pretty much the same from the $65 barrel of oil. (For instance, gas is $2.37 in the currently least expensive state of Missouri, while it is $3.40 in Alaska and $3.77 in the most expensive state of Hawaii). So what is the difference in price? Undoubtedly it is due to transportation costs. As ironic as that may sound, gas runs about 6 pounds per gallon. So when we ship processed gas into the state, it has taken a good deal of fuel to merely carry it from the refinery. There are also most likely price efficiencies lost from such a small scale of users compared to the lower 48. Consider it as part of the price to have large clear places and beauty daily which the tourists dish out thousands to travel and see!
You may have noticed that the fuel for your vehicle has gone down from around $4 a gallon earlier this year to about $3.50 a gallon recently (in the Fairbanks area). Depending where you shop for fuel in Alaska, you may have seen a 15% decrease at the pump during this past year. Yet on world trade, the price has dropped about 30% a barrel (as it was $100 a barrel and is now about $70 a barrel). You are getting some individual benefit at the pump, and if you use oil to heat your house you benefited the last time you filled up the fuel tank for the furnace,boiler or Toyo stove. But as a recipient of statewide benefits that are largely paid for by budget revenues fueled by oil production, how are you fairing from the drop in the price of crude oil? A lot of that answer is tied to the tax and credit system the State operates with oil producers. Alaska Dispatch News Reporter Dermot Cole has an interesting article to look at. It is a pertinent article, as having just gone through a referendum vote where every Alaskan got a say in whether to keep the legislatively crafted Senate Bill 21 or not, there is now a real life example to test some of recent assumptions that were made by experts. There are a lot of forecasts and accounting systems involved that make the economic impact to Alaskans (of crude oil price changes) complex, yet in simple terms this article is good to start thinking about several energy dynamics that are at work. See what you think after reading this article. Are you better off in whole with lower prices in this new context of dropping oil prices?
I recently saw an ad in the Fairbanks Daily Newsminer announcing that soon natural gas would be brought to Fairbanks- the date on the paper was over half a century ago. There have been continued efforts which culminated last year with the Governor’s Budget approving around a third of a billion dollars in loans, grants and other planning tools to get affordable gas into the Interior. This is important for businesses, who spend vast amounts on money on space heating, as well as individual residents watching their home budget. This time trucking the gas from the North Slope has been the preferred project. The question always is, by the time you pay for new infrastructure to secure the gas, load it onto trucks, off load it and then take care of costs to get it into individuals homes, is it worth it financially when compared to the substitutes (fuel oil in this case)? An editorial this weekend in the Fairbanks Daily Newsminer lines out many of the details. The most important one though, is that tomorrow, Wednesday 11/12/14, Fairbanks will know what the State’s AIEDA office has calculated the overall costs at. Read the article, see if it interests you, and possibly we’ll see you there!
CBC has an article about Barrow, the election and whaling. Point Barrow was a point of contact for operations during the pre-petroleum days when whale oil was used for lighting and the smooth running of machinery. About a hundred years ago, after petroleum replaced whale oil, the Navy planted research station, and local natural gas was tapped for cheap local use. The article points out the cost of living in Barrow by mentioning milk that is over $10 (? no amount, yet I assumed gallon) and $7 gal/gas. The fuel noted is just under twice the amount than it costs in Fairbanks. There are villages in Interior Alaska where it costs more due to having to fly it in. But again, while Barrow does have high prices on most commodities that have to be brought in, it does have local goods such as whale for groceries and natural gas for cheap electrical generation and space heat! It may be the farthest north and remote city in the nation, yet it also has relatively cheap space heating (which is the real cost sink in living north of the Anchorage/Mat-Su bowl area).
If you were to have to pin down one use of energy you use as an Alaskan resident, and only use energy for that, which would it be? Power, Space Heat, Transportation, Mechanical Operations? With relatively cheap plug-in power ($.12/kw in Anchorage, $.22 in Fairbanks, $1+/kw in other areas off the road system) and being able to get diesel in any community for heat or transportation we often take for granted flicking on switches, letting thermostats kick on and hitting the gas. Yet there have been instances on the road system where there has been a outage or inability to transfer fuels due to a sudden or unexpected storm/earthquake event for several days. Considering that Alaska is ‘islanded’ from the lower 48, and most of the time from Yukon, it is helpful to think about having your own back up generation and with that a consolidation of fuels. While it may not be possible to get down to one fuel source, there are devices that can take dual fuels (multi-use fuel stoves that burn kerosene or gasoline) as well as various shapes of fuels (such as wood stoves that can take cordwood, chipwood or pellets). Check out the various renewable energy shops in town to see what it available for generation and/or energy storage. A year and a half ago the people of Galena didn’t see a flood coming, yet many after spoke of wishing they had home energy devices. It is something to think about, even if you’re not a prepper or doomsdayer!
For those baby boomers who grew up during the cold war and remember vividly WWII, a story came out this weekend that is sure to have people scratching their heads as they think back to the past and think to the future of possible geopolitical solutions involving the still vast oil and gas resources in the Middle East. Haaretz newspaper published an article outlining how Germany initially retracted a $382 million discount for Israel in the purchase of three missile boats built to sell to Israel to protect its gas rigs. Highly political, the reneging came about over breakdown in Palestinian/Israeli peace talks and EU sensibilities. With diplomatic loops being played all the way up to the head of state on the German side, the discount was re-credited.
Those knowing basic history might remember that the mid 1940’s saw the official end of ownership not only to German oil fields of North Africa, but also of her occupied colonies. (Fossil fuels were lean up to this point- during the latter part of the war Germany was using wood biomass to keep some residential vehicles moving!). At the same time, the Soviets came rushing into Germany/Eastern Europe as an occupier. And many Jewish immigrants coming from Germany went through a war of their own to settle into what has turned out to be a very fossil fuel rich region.
With almost three-quarters of a century of nationalistic developments since, and as diplomacy politics often go, the motives of Germany’s move this year to retract and then reassign the discount for Israel run the gamut in the comments section of the Haaretz article. Probably one of the more solid tidbits to go along with ideological EU ‘decolonization’ pressures being put on Israel is the idea that a recently aggressive Russia (i.e. Georgia and Ukraine) close to home may be prompting desires by EU/Germany to help keep Israel safe due to its natural gas reserves. While Germany itself has dropped nuclear and gorged on solar and now offshore wind, it is the underpinning of the EU’s cohesion and may see Russia’s strong market position on gas pricing (at least in the short run) as a danger to Europe- especially going into abnormally cold winters for the continent. And Israel’s generous gas position is in the context of an unpredictable Iran as a neighbor in the Gulf.
Read the article, and comments, and see what you think! Feel free to make comments after the article or on this blog to promote discussion. Along with the twists and turns of national relations having been astounding the last century, one of the more fun things of this speeding age, I think, is the ability for anyone (with a username and password) to put their brain noodling – regardless of understanding and background -up on comments after articles (and in blogs…)
For those of us who are Baby Boomers who grew up with Elton John music, this is a perfect line to apply to our next workshop- Rocket Stoves. (Actually, according to amiright.com, Elton sang ‘burning your fuse up here alone…’).
Anyway, on October 31 after supper, from 5:30-9:00 p.m. you can get out of taking the kids trick-or-treating by coming on over to the Harper Building of UAF’s Aleutian Interior Campus on Geist Ave. and building two rocket stoves to take home (as well as get a manufactured one to take as well). We will look at some commercial models and a slide show from Jim Scott of Alaska Sustainable Agriculture of how one was made to heat a shop/home. Rocket stoves are favorite devises for campers or shops where a person is present to reload small amounts of biomass which burn very efficiently by 1) burning just the tip of the fuel, 2) insulating the burn pot for a hotter burn 3) burn up the flue gasses before they exit the stove. If you have any any questions on this workshop, call Carmen at 474-5854. Registration is available online.
Oh – and if you have to take the kids out for Halloween, you can still catch the Saturday 9:30-1:00pm
I was forwarded a nifty 8 minute YouTube from our Associate Director demonstrating ways in which repurposed building materials have been utilized in Britain. They have taken materials from deconstruction, as opposed to demolition, projects and found unique ways of using their composite properties in providing insulation and load bearing strength to a new building. Even using outdated materials that had a different purpose (such as VHS and Cassette plastic/tape), the demonstration gives hope that 1) seemingly obsolete materials may have a second purpose and extend their useful life and 2) less energy can be spent from landfill operations in burying old items. Here in Fairbanks the transfer stations have set aside areas for recycling, and old doors, hot water heaters, toilets, etc….. are often set aside specifically for a second user as people update and remodel their homes. And if you look online, there are even retail stores that have now begun with selling old style bricks with the mortar clipped off, old drywall already painted, insulation, and specialty door knobs/cabinet handles. The downside to collecting these materials in good shape is that much more time is used, and municipalities might incur more liability with a job site that remains open longer. So, often it is the cost of labor on tearing apart, sorting and delivering formerly used materials which makes deconstruction vs. demolition cost effective. Watch the video and see what you think of repurposing!
This year’s Alaska Rural Energy Conference came to a close Thursday with a wide variety of topics covered and various policy leaders, vendors, tribal/municipal power workers, utilities and service agencies attending. Cooperative Extension had a booth with various publications, as well as some working models of rocket stoves to display. The conference started daily with a large session together, and then folks had a choice of one of two breakout sessions of panels before lunch with two slots of panels after lunch. Topics ranged from how utilities price electricity, how waterplants use electricity in a community system to latest technologies in battery storage. Extension presented an overview of how oil displacing technologies and conservation measures are being employed in about 40% of the State’s school districts (this topic generated a good amount of discussion). The conference occurs every 18 months and is run by Alaska Center for Energy and Power (ACEP) with assistance provided Alaska Energy Authority (AEA). If you could not attend, keep your eyes open on ACEP’s website for videos of each session in the next couple months!