Global refinery disruptions widened fuel margins in 2026, and rural Alaska's barge fuel cost more"

Galena's electric utility paid about $4.97 a gallon for the fuel it received this year, up from $3.84 in 2025. On St. Paul Island, an August delivery of heating fuel cost about $7.55 a gallon. Filings with state regulators from the two communities offer a documented look at what bulk fuel cost rural Alaska in 2026.

Galena's latest filing includes invoices for 433,594 gallons delivered by Ruby Marine between May and September, costing about $2.15 million. In its 2025 filing, Galena reported 380,525 gallons for about $1.46 million. Galena bought more fuel this year, but volume explains only part of the additional spending. Each gallon cost about $1.13 more, a 29 percent increase.

St. Paul's August invoice from Vitus lists 210,000 gallons of winter-blend heating fuel at $7.50 to $7.59 a gallon, about $1.58 million in all.

The two prices are not directly comparable. Galena's is an average across a season of deliveries, and St. Paul's is one shipment of heating fuel. A community's bill depends on when its fuel was bought, what product it bought, where the fuel came from and how far it traveled. The Alaska Chadux Network told legislators that more than 160 western communities depend on the May-to-October delivery season, and that much of their fuel normally comes from Asian refineries running Middle Eastern crude. West Coast refineries, it warned, lacked the capacity to replace that volume at scale.

The summer decline came after the buying

Alaska North Slope crude averaged $111.17 a barrel in April and $114.66 in May before falling to $78.64 in July, according to the state's Summer 2026 fuel report. The state said much of the pricing it surveyed, particularly in western Alaska, likely reflected fuel sourced during that spring peak. Prices that fell in July did not change the cost of fuel already contracted, shipped or sitting in community storage. As Alaska News previously reported, a short purchasing window can lock international conditions into local prices for months.

Retail diesel prices have since climbed again. AAA's Alaska diesel average reached a record $6.68 a gallon Thursday, up from $5.54 a month earlier and $4.08 a year ago. Fairbanks averaged $6.73 after setting a metro record over the weekend. The Energy Information Administration's West Coast diesel average outside California, which groups Alaska with five other states, rose from $4.86 on July 6 to $6.79 on Sept. 21. Both track retail pump prices, not bulk fuel delivered to communities off the road system.

The state's summer survey found gasoline averaging $7.56 across 97 reporting communities and heating fuel averaging $7.97 in 90 communities without a local subsidy. Western Alaska recorded the highest regional averages: $8.70 for gasoline and $9 for heating fuel.

Finished fuel got more expensive than crude did

The gap between crude oil and finished fuel widened sharply in 2026. The Energy Information Administration said the New York Harbor gasoline crack spread, the difference between crude and wholesale gasoline, averaged about $1 a gallon more than in 2025 from May through early September. Diesel and heating oil carried an even wider spread as inventories tightened. EIA attributed the increase to refinery disruptions in Russia, China and the Middle East, reduced U.S. imports and rising foreign demand for U.S. fuel. In September, it raised its forecast for this year's diesel and heating oil spread from $1.30 to $1.57 a gallon.

Refiners' second-quarter reports show the wider margins. Marathon Petroleum, which owns Alaska's Kenai refinery, reported its refining and marketing margin rose to $36.33 a barrel from $17.58 a year earlier. Valero's refining margin went from $11.78 to $24.42, and Phillips 66's from $11.25 to $24.08. Spread over the 42 gallons in a barrel, those increases are roughly 30 to 45 cents a gallon. That is a meaningful part of the market change, but not a per-gallon charge on Galena's delivery. The companies operate in different regions with different crude and product mixes, and their margins don't identify the fuel later delivered to Galena or St. Paul.

Their profits rose with the margins. Marathon's second-quarter net income went from $1.2 billion to $5.1 billion, Valero's refining operating income from $1.3 billion to $4.5 billion and Phillips 66's net income from $0.9 billion to $3.8 billion. Marathon and Phillips 66 reported running their refineries at 94 percent and 96 percent of capacity during the quarter.

Shipping added another layer

The state's summer report said at least one supplier sourced fuel from the Gulf Coast instead of Southeast Asia, adding a route through the Panama Canal. The Alaska Municipal League said suppliers reported ocean shipping quotes as much as three times the prior year's. It said most suppliers used 30-day average pricing, which limits exposure to a one-day spike but also keeps buyers from catching a brief dip.