Rural Alaska residents struggle to heat homes

JUNEAU, Alaska -- One of the cruelest ironies of living in Alaska is this:~ Shipping costs: Most of the state's oil must be refined on the West Coast

The state is awash in oil money, but many residents of remote villages are struggling to heat their homes because of fuel bills that are two or three times the national average.

Now state lawmakers are considering offering hundreds of dollars in rebates to help offset high home-heating prices, which result in part from the steep cost of shipping oil by barge or plane to the Alaskan hinterlands.

In the village of Metlakatla, a few hundred miles south of the Capitol in Juneau, Ed Littlefield is among those trying to reduce his fuel bills by chopping wood.

"The fuel prices are so high that I was out of fuel for two days and, boy, I froze my butt off," said Littlefield, a partially blind Vietnam veteran who suffers from diabetes. He lives on disability.

Lawmakers have less than two months in this year's session to address the problem or risk further embarrassment by Venezuelan leader Hugo Chavez, who has been quicker to come to the aid of Alaskans than their own legislature.

Last year, Venezuelan oil company Citgo donated $5 million to distribute free heating fuel to Alaska's poorest communities. The company has again promised help this year, but the program has gotten off to a late start.

"Everybody hates Hugo Chavez, but I want to thank him for the fuel he got me. That lasted me about three or four months last year," Littlefield said.

Despite the state's vast oil wealth, fuel can still be pricey because most of it must be shipped as crude oil to be refined on the West Coast. Then it gets sent back to Alaska.

"It seems crazy to me that Alaskans are paying so much for a resource that we get in our own backyard," said Democratic state Rep. Mary Nelson.

Home heating fuel, which averages $3.30 a gallon nationwide, averages $4.30 a gallon in Alaska, peaking at $9 a gallon in Arctic Village, a community hundreds of miles off the road system where fuel has to be flown in because the village cannot be reached by barge.

Gasoline, averaging just over $3 a gallon nationally, averages $4.54 a gallon in Alaska, $7 a gallon in Arctic Village.

The high cost is particularly harsh in cash-strapped villages where residents depend on fuel so they can travel by snowmobile, ATV or boat to hunt and fish.

Two proposals

Two proposals for energy assistance have been floated in the legislature, but they may have trouble gaining traction among lawmakers.

Rep. Bill Thomas, a Republican who represents nearly 50 small communities in the state's southeast panhandle, suggests a $500 payout to state residents, at a cost of about $360 million. It would be paid not from the surplus as he first imagined, but from the profits of the state's oil wealth savings account, the $38 billion Alaska Permanent Fund.

But many lawmakers are loathe to touch the earnings for fear Alaskans would perceive it as a raid on the fund that pays them an annual dividend -- $1,654 for nearly every man, woman and child last year.

Thomas shrugs off those concerns. "We'll see what the impacts might be [to Permanent Fund Dividend checks]. It might be a few dollars," he said.

Republican Sen. Tom Wagoner is proposing a $750 credit for every household to be applied to utility bills, paid by the state in lump sums to power companies.

It's more direct, he said.

"It's fair and equitable and it doesn't give out a cash payment that can be turned into bottles of whiskey, tobacco, bingo parlors or whatever," Wagoner said.

Many lawmakers appear less excited about funneling money back to residents than hoarding the windfall as a cushion for possible hard times ahead.

The surge in state revenue, fed by high oil prices and a recent boost in oil taxes, will probably generate a $3 billion to $4 billion budget surplus this year. But production in the North Slope oil fields is steadily dropping at 6 percent a year.

Lawmakers agree that socking away some of the surplus would help tide the state over until construction of a natural gas pipeline from the North Slope. That project -- if it ever comes to fruition -- is at least 10 years away.

Republican Rep. Ralph Samuels cautions against putting money into assistance programs that will just have to be cut in the leaner years.

Furthermore, he warns that a cash giveaway could feed into a perception of Alaska as a free loader state, especially after national media focused on federal earmarks to pay for Alaska's notorious "Bridges to Nowhere." One of the bridges was a $400 million proposal to build a bridge connecting the town of Ketchikan to its airport, which is accessible only by ferry.

As the rest of the country sees it, "we've got $40 billion in the bank, we're giving everybody free money, we don't pay taxes, we want bridges," said Samuels. "Heating oil, in particular in rural Alaska, is a huge problem but people in the rest of the U.S. don't understand the problem."

Mary Nelson, the Democratic lawmaker, said the Legislature needs to stop worrying and approve a package.

"Hugo Chavez, all the way in Venezuela, understands our needs, but our own policymakers are not paying attention to those needs," Nelson said. "We all know there's a crisis, but we need to see evidence of that concern in the budget."