Draft study recommends rural Alaska fuel cooperatives, with comments due Friday

A draft study for the Denali Commission recommends that rural Alaska communities form regional cooperatives to share bulk fuel purchasing, maintenance and training while keeping ownership of their own tank farms. The commission is taking public comments on the draft through Friday, Oct. 16.

The study asked whether aggregating rural Alaska's bulk fuel facilities could cut costs, extend tank life and reduce spill risk. Its answer is yes. Tank farms in the study's data charge $7.68 a gallon on average. With no financing, a small facility operating independently would need to charge $11.51 a gallon to cover replacement and routine upkeep, compared with $9.71 in a regional cooperative.

The model assumes tanks last 35 years in a cooperative and 25 years under collaborative partnerships, a looser arrangement. Without that longer life, a cooperative costs about 27 cents a gallon more than collaborative partnerships. The price data also predate the 2026 war with Iran. A more current benchmark, reported Oct. 2, found heating fuel in surveyed Alaska communities averaged $7.97 a gallon this summer, up nearly 23% since winter.

In a Wednesday post, the commission asked "the people who know these systems best" what it got right, what it missed and what questions remain. The commission plans to present the findings at the Alaska Rural Energy Conference in Fairbanks on Oct. 28.

The study is a joint effort of the commission and the Alaska Energy Authority, which started it in summer 2024.

Roughly 400 bulk fuel tank farms operate across rural Alaska. They average 40 years old, past their expected 20- to 30-year life, according to 2025 congressional testimony from the commission. The Government Accountability Office reported the commission provided more than $275 million for bulk-fuel storage projects from 1998 through July 2023.

"Our power and bulk fuel program is 1/3 to 1/2 of our annual appropriations that we receive," Jocelyn Fenton, the commission's director of programs, said at an energy conference in May.