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Kotzebue fuel options narrow

January 20th 3:19 am | Hannah Heimbuch Print this article   Email this article   Create a Shortlink for this article

Just as Alaska started its decent into colder realms this October, Kotzebue residents' options for fuel delivery were narrowed to one when the Kikiktagruk Inupiat Corporation closed the doors on its fuel delivery service. This leaves Crowley, which owns the tank farm in Kotzebue, the sole delivery source of heating fuel in town.

"For our part, Crowley has added staff and equipment to be able to handle the additional business we have seen," said Robert Cox, Vice President for Crowley Petroleum Distribution, Inc.

That includes leasing one of the fuel trucks previously operated by a KIC driver, said KIC CEO Cole Schaffer.

"The primary reason was because of the liability," he said.

Everyone in Kotzebue buys fuel from Crowley, Schaeffer said, and KIC did get a small discount when they went to fill the delivery trucks. Their profits after delivery was so small, however, that it became unrealistic to stay open - especially when considering the potential costs of cleanup should a spill occur.

"So from the profit-margin standpoint, it's a high risk business with minimal profit," Schaeffer said.

Like anyone dealing with the movement of fuel these days - be it by land, sea or air - KIC did its best to avoid any hazardous accidents. They are detrimental to the environment and they take a sharp toll on the bottom line.

Schaffer referenced the one accident they had in recent history, a seven-gallon spill last summer. After excavation to clean up all of the fuel, a consultation with a soil expert and other steps required by DEC following a spill, KIC had spent about 20 grand.

Schaffer said a more serious accident could easily spike the cleanup price into the hundreds of thousands, and it just wasn't worth the risk.

Following annual price negotiations with Crowley in October, which resulted in a fuel discount not sufficient to stay open, KIC notified its customers it was shutting down. Everyone on their delivery list switched over to Crowley within two weeks. While this didn't ramp up the price of fuel to those who switched, one thing did go up - the minimum amount. While KIC required a minimum purchase of 30 gallons to deliver to a home or business, Crowley customers must buy at least 53 gallons of fuel - a full drum - to get a delivery.

At a current rate of $6.27 per gallon, that's an extra $144 upon delivery.

It seems no matter which direction you look, fuel matters in the Arctic tend to be both expensive and risky.

 

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