Senator Murkowski fights for lower gas prices at a press conference.
Gas prices and Alaska
Many of you have contacted me to express concern about the fact that fuel prices remain high in Alaska despite dramatic decreases in the price of oil and gasoline across the country. I would like to take this opportunity to explain my understanding as to why gasoline prices tend to be higher and decrease more slowly in Alaska compared to the Lower 48, despite the presence of crude oil and refineries in our State.
While it would seem that gasoline should be cheaper in Alaska since it is closer to the source of raw crude oil, the unfortunate fact is that Alaska’s three refineries do not enjoy the economies of scale that larger refineries in the Lower 48 do. In other words, since Alaska’s refineries don’t produce enormous amounts of gasoline like Lower 48 refineries do, it isn’t as cost-effective to produce. In addition, Alaskan wage rates are higher because of the higher cost of living, and shipping and construction costs are considerably higher than in the Lower 48. Therefore, Alaskan refineries have never been able to sell refined gasoline as cheaply as in some other American locations.
I understand the frustration of many Alaskans who pay higher fuel prices in a State that supplies America with 13 percent of its domestic oil production. Over the years, there have been several Alaska Attorney General and Federal Trade Commission investigations into allegations of price gouging nationwide. To my knowledge, none of those investigations have ever uncovered evidence of price fixing or price gouging in the setting of Alaska fuel prices. There is certainly a lag between when prices of crude oil rise or fall and when the full impact of those price changes are seen at retail pumps. This is especially the case in Alaska, where North Slope crude is priced based on a monthly contract price and not necessarily on spot market daily prices. If prices do not continue decreasing in Alaska, however, I plan to request that a new investigation be conducted to determine why gas prices in Alaska are decreasing more slowly than in the rest of the Nation.
To address fuel prices on a national level, I believe it is essential for Congress to act to increase fuel supplies and decrease fuel demand, both of which will help lower the price of fuel and keep it low. To accomplish this goal, I have long supported a balanced and comprehensive energy policy that includes renewable and alternative energy, energy efficiency, nuclear power, and additional oil and gas production.
In the 110th Congress (2007-2008), I supported the extension of numerous renewable energy and energy efficiency tax credits, a clean energy bill that increased fuel efficiency standards, building efficiency standards, and appliance efficiency standards, and I proposed a renewable energy grant program that will help pay for geothermal, wind, ocean, and small hydroelectric energy projects in Alaska. All of these provisions were enacted into law and are currently helping the United States transition into a future of renewable and alternative energy.
This transition will take many years, however, and in the meantime it is crucial that we produce more domestic oil and gas in order to decrease our dependence on foreign energy and supply the energy we need to power America’s economy. Besides supporting the opening of a small portion of the Arctic National Wildlife Refuge (ANWR) to oil and gas development, I also back efforts to increase oil and gas production from the Outer Continental Shelf (OCS) as well as waters without environmental issues such as parts of the Gulf of Mexico and waters off Virginia’s coast. I was pleased to see the President rescind the Executive moratorium on OCS development, with Congress following suit in late 2008.
Although I introduced and cosponsored bills in the 110th Congress that would have initiated or expanded domestic energy production in ANWR and the OCS, oil shale development, clean-coal development, new refinery construction, new nuclear power plants, and provided even more funding to renewable energy, none of these bills were allowed to come up for a vote before the end of the 110th Congress, meaning they expired at the end of 2008.
As the 111th Congress begins, I will continue to urge my colleagues to support domestic energy production as a vital component of a balanced energy policy that also includes renewable energy and energy efficiency. Only by pursuing these three goals together can we make significant headway on decreasing our dependence upon foreign oil and maintaining low oil and fuel prices. Additionally, I will continue to search for creative solutions to help ease Alaskans’ pain at the gas pump.
