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A dramatic rise in fuel prices in Alaska in 2008 had a pronounced impact on Alaska's coastal economy, changing the behavior of harvesters at sea and sapping income from fishing communities across rural Alaska.
Higher fuel prices suck money out of coastal economies 111908 BUSINESS 1 Morris News Service, Alaska A dramatic rise in fuel prices in Alaska in 2008 had a pronounced impact on Alaska's coastal economy, changing the behavior of harvesters at sea and sapping income from fishing communities across rural Alaska.
Wednesday, November 19, 2008

Story last updated at 11/19/2008 - 4:23 pm

Higher fuel prices suck money out of coastal economies

A dramatic rise in fuel prices in Alaska in 2008 had a pronounced impact on Alaska's coastal economy, changing the behavior of harvesters at sea and sapping income from fishing communities across rural Alaska.

"It had a tremendous effect," said Jeff Stephan, director of the United Fishermen's Marketing Association at Kodiak. "It sucked a lot of money right out of this fishing economy.

"It left less money for distribution to the crew, for maintenance, for (vessel) improvements and innovation," he added. "It was an unproductive cost, just burning up through the stack, and of course that reflects across the whole country."

Coastal Alaska, and perhaps islands in particular, are dependent upon goods being shipped in to residents. While the cost of fuel was rising, so was the cost of anything using petroleum-based products and the fuel used to produce everything, Stephan said.

The high price of fuel changed people's behavior too.

"It used to be during closures (of fisheries) that the fleet would come back to town," Stephan said. This year " a lot of people stayed out on the grounds between closures."

In Bristol Bay's famed sockeye salmon fishery, fishermen also chose to conserve on high-priced fuel by staying at sea between fishing periods, said Robin Samuelsen, a Dillingham businessman whose family has fished Bristol Bay for generations.

"They would anchor next to sand bars and just stay out in the fishing district," said Samuelsen, president and chief executive officer of the Bristol Bay Economic Development Association. "Fuel was a big factor."

People would stay out 20 miles, waiting six to 12 hours at sea for the next fishing period to open, because of the high cost of fuel, he said.

And fishing boats leaving Southwest Alaska communities for the fishing grounds would idle out to the grounds, he said. "You don't see too many boats going too fast any more. Everyone is watching their fuel."

While some vessel owners have upgraded to more fuel-efficient vessels, it's a pretty hard jump to make economically, Samuelsen said.

"It cost $40,000, $50,000 or $60,000 to replace some of these engines," he said.

Such upgrades involve changing the engine, the engine mounts and the exhaust systems, plus the price of having someone come down to do some welding, he said. "The overall cost is pretty expensive."

In Southeast Alaska too, fuel prices have made it a lot harder for people to make ends meet, said Linda Behnken, executive director of the Alaska Longline Fishermen's Association in Sitka. People can no longer afford to drag the gear around trolling, if they don't know the fish are out there.

In Sitka, which has only one supplier of diesel fuel, veteran harvester Eric Jordan said he is lucky to have as fuel-efficient vessel as he does. Fuel costs aren't a significant factor to him, but is something to consider.

Jordan said he averages burning about 1.1 gallons of diesel fuel an hour trolling and running back and forth to his fishing grounds. Still he has spent less time trolling for those prized Southeast Alaska winter king salmon because of the combination of fuel prices, foul weather, shorter hours of daylight and fewer kings.

His friend Fred Fayette, another salmon troller from Sitka, said his boat is less fuel efficient than Jordan's vessel, burning four to five gallons an hour, "and at $4 a gallon, it's really a consideration for me to go very far. Or if I'm going somewhere, I run the engine a lot slower."

Having a single supplier of diesel fuel is also a factor for Fayette, who said residents are working on getting another one into town, to provide some price competition.

With the cost of fuel at $20 an hour, or $150 to $200 a day, "if I can't make more than that a day, it doesn't make any sense to do it," he said.

Right now fresh winter king salmon in Southeast Alaska are fetching harvesters $7.75 a pound, so that even a small fish is worth $50, but they're just aren't that many kings in areas where regulations designate that the harvesters can fish.

"I just got back from fishing for four days and I have eight fish," Fayette said.

"Financially it wasn't worth it, but I spent a lot of time learning a new area, so when there are fish there, I'm better off in my business."

Fayette said the last time he bought diesel fuel, it was running $3.55 a gallon.

"If it was $2 a gallon, it would be way more feasible to do what I'm doing on the rig I'm doing it on," he said. "I have to watch how much I use."


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