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Fuel price spikes hit Alaska harder Economists with UAA’s Institute of Social and Economic Research analyze transportation sectors, find rail is most fuel-efficient Wesley Loy For Petroleum News
Alaska is particularly sensitive to spikes in fuel prices due to its unique relationship with transportation services, a new university study says.
“Although Alaska has a low absolute energy demand compared with the U.S. average, its per capita energy consumption is the highest in the country — more than three times the U.S. average,” the study says. “A number of factors contribute to the state’s higher per capita energy consumption. Alaska’s role as a major world air cargo and transportation hub, oil producer, and marginal refiner substantially increases the per capita use calculation. Alaska’s remoteness and dispersed populations, along with a limited road system, cause Alaskans to depend more on air transportation services. The relatively greater dependence of Alaska industries and residents on energy creates a higher vulnerability to energy price volatilities and shocks.”
The study is from the University of Alaska Anchorage’s Institute of Social and Economic Research.
The four authors, led by Ginny Fay, assistant professor of economics at ISER, analyzed energy use in Alaska transportation sectors to assess the impact of sudden fuel price moves. They also looked at the potential impact of climate change legislation, such as a carbon emissions tax.
Trains and planes, boats and trucks The researchers estimated the fuel use in four transportation sectors: air, rail, truck and water.
They also compared the “fuel intensity” of the sectors. One measure is ton-miles, defined as hauling one ton of freight one mile.
By this measure, rail easily is the most efficient form of transportation for moving freight per gallon of fuel in Alaska, followed by barge, ship, truck and ferry, the researchers found.
Alaska has two railroads, the main one being the state-owned Alaska Railroad that carries passengers and cargo such as refinery products and coal through a corridor from Fairbanks to Seward. In Southeast Alaska, the short White Pass & Yukon Route Railroad is a privately owned line run for tourists.
Despite the fuel efficiency of rail, Alaska is even more dependent on two other modes of transports – planes and watercraft.
“Given its geography, Alaska has long relied on aviation and marine transportation to move people and goods,” the ISER study says. “Freight transport for goods used in Alaska continues to be dominated by marine transportation, as has been the case since Russian colonization. Although Alaska is the largest state by area, its road mileage is the fifth lowest in the nation, leaving 82 percent of its communities unconnected to a state road system.”
In fact, Alaska depends more heavily on water transportation than any of the continental United States, the study says.
Trucking, on the other hand, is a relatively small player in Alaska.
“Alaska is connected to the rest of the nation via the Alaska Highway, but does not have the well-developed road system of states in the Lower 48,” the study says.
Transportation-intensive industries As part of their study, the researchers assessed the Alaska industries most dependent on transportation services, and thus the most sensitive to changes in transportation costs.
Seafood product preparation and packaging ranked first, with support activities for oil and gas operations second and the drilling of oil and gas wells fourth.
The researchers further attempted to quantify the impact of fuel price spikes between 2008 and 2010.
“It would have cost Alaska industries about $500 million more a year to produce the same goods and services, if they had continued to use transportation services and fuel at the same rate as before the price increases,” said an ISER summary of the study. That’s about 1 percent of the gross state product.
The report and summary are online at www.iser.uaa.alaska.edu.
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