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Tanana Chiefs to aggregate rural fuel
In an attempt to tackle the crippling cost of fuel in rural Alaska villages, the Tanana Chiefs Conference, a nonprofit consortium of 42 Interior Alaska communities, has created a subsidiary called DNH Fuels LLC to aggregate village fuel purchases and coordinate transportation of the fuel to the villages.
Currently, each village negotiates an individual contract with one of four rural fuel suppliers to acquire and ship fuel to the village, with the shipping typically happening during the summer, when barges ply Alaska sea and river routes. By aggregating supply requirements across multiple villages DNH hopes to negotiate lower fuel prices than an individual village would be able to achieve and by coordinating transportation arrangements for the aggregated supplies the company hopes to minimize transportation costs.
One large, bulk purchase “It would be one large, bulk purchase instead of several smaller ones,” Howard Darling, DNH Fuels general manager, told Petroleum News June 8.
And, although DNH plans to sell fuel to villages at cost, the company does plan to turn a profit by selling fuel to other Alaska entities, using its bulk-purchase capabilities to leverage competitive pricing and plowing its profits into perfecting its rural fuel supply strategies.
High fuel costs have become a major problem for Alaska rural communities, forcing some people to choose between buying fuel and buying groceries, and causing some people to leave their villages. In 2008 the cost of fuel ranged from $6 per gallon for the most accessible communities to $12 per gallon for villages only accessible by air, DNH said.
“It’s the worst I’ve seen,” said Jerry Isaac, president of the Tanana Chiefs Conference. “We can’t wait for the government to come and save us; we have to find our own way out of this.”
—Alan Bailey
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