Fuel Prices in Southeast Alaska
By Capt. Dan Nutt
January 06, 2009
Having noticed a few letters concerning the fuel prices and how
that is related to the barges that bring the fuel, I wanted to
clarify a couple points and hopefully provide a better picture
of the fuel transportation issue for you.
The tugs and fuel barges work for the petroleum distributor and
do not have an financial interest in the fuel carried onboard.
Therefore, it is incorrect to state that the fuel facilities
"buy" their fuel from the barge.
We, the barge operator, negotiate a transportation agreement
with the fuel distributor. We haul fuel for Delta Western, Petro
Marine, Anderes Oil, and similar companies. The transportation
rate we charge our customers can be computed in several different
ways, but is normally negotiated annually and reflects the market
price of tug and barge services at the time of our negotiations.
The transportation cost is a small component of the cost of a
gallon of fuel carried by barge. This is due to the large quantities
of oil carried at one time. The barge PM 230, which services
many ports in SEAK carries a maximum of 25,000 barrels, which
is equivalent to about a million gallons. Barge transportation
is very efficient, in that you can spread the cost of the transportation
of the barge load over that million gallons. The cost of transportation
has increased due to the cost of the fuel needed to transport
it. Depending on the transportation agreement, either the tug
operator or the customer has to not only transport the fuel,
but also has to buy fuel to run the tug.
The passage of OPA-90 in the wake of the Exxon Valdez incident
required that all single hull barges be replaced with double
hulls by January 1, 2015. The capital investment and shipyard
time required to bring new equipment into the system means that
we have already started replacing many of our older barges, which
also affects the transportation rate.
As a barge operator, our primary focus is SAFETY! Aside from
the usual labor and benefits, our costs include training the
crew for normal operations and emergencies, maintaining the equipment,
and providing for a spill response system in SEAK that is required
by Federal and State law. Nearly 1.5 million dollars a year is
spent by the barge operators and fuel distributors to maintain
the spill response capability in SEAK.
Weather and other delays are very costly and can affect the cost
of fuel significantly.
Barge transportation remains the safest, most versatile, and
most cost efficient mode of fuel transportation anywhere in the
United States. As barge operators, we take very seriously the
responsibility we have to deliver your fuel as safely and efficiently
I hope this helps to explain some of the issues I have seen raised.
Feel free to drop me a note if you have any other questions.
Capt. Dan Nutt
About: "Regulatory Manager
for K-Sea Transportation, a tug and fuel barge operator in Southeast
Received December 24, 2008-
Published January 06, 2009
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