Harbor grapples with confusing fuel prices


July 7, 2011

By Margaret Friedenauer

Haines and Skagway - only 13 miles of water separate the two towns, but they are a world apart in gas prices.

Or are they?

Rumor on the street - and the docks - is that Skagway harbor has been offering much cheaper diesel and gas prices than Haines during the height of commercial fishing and tourism season. But a quick comparison shows that Haines fuel is actually on par with Skagway prices, at least at the moment.

Prices this week in Haines through Delta Western Inc., are $4.50 a gallon for gas and $4.60 for diesel, including all taxes. Prices through Petro Marine Services in Skagway are $4.46 for diesel and $4.56 for super gasoline with tax.

"We’re actually in league with Skagway," said Haines Harbormaster Ed Barrett. "Word gets around that we’re charging a lot more than Skagway is and that’s just not so."

The confusion comes in part because Petro Marine in Skagway does not always include taxes in the prices it quotes.

But confusion also comes from the recent turnover of fueling operations at the Haines harbor. Fuel supplier Delta Western had for years staffed the marine fuel dock. About two months ago they told Haines Borough it was making a "business decision" to quit providing that staff, according to borough manager Mark Earnest. He said Delta Western gave no particular reason for the decision.

Delta Western executives in Anchorage referred questions to Delta Western President Amy Humphreys in Seattle, who refused to comment on the subject, or any other issues with the borough, saying all dealings are "private" or "non-issues."

But the sudden turnover of operations to the borough requires harbor personnel to become quick studies on the fuel market, Barrett admits.

"We’re still trying to figure out what the margins are and we don’t know what the costs are for cost recovery yet," he said. "We’ve been doing this a month and don’t know what the market fluctuations are."

Barrett said also that Haines fuel may occasionally be a few cents higher than Petro Marine because there is disagreement between the borough and Delta Western over federal highway taxes. Delta Western insists the borough must charge the federal highway excise tax. Barrett said the borough has tried convincing Delta Western that the fuel is for marine use only, but to no avail.

"We were told by Delta Western that we would not be able to escape that tax under their umbrella," Barrett said.

Tim Cochran, plant manager for Petro Marine in Skagway, said the company does not charge the highway excise tax on their fuel, simply because it’s not supposed to be charged on any marine fuel. The company imposes other taxes on its fuel, including a Skagway municipality float fee for bringing fuel over the dock. But Cochran said he believes Petro Marine fuel is routinely less expensive than Delta Western fuel in Haines.

"We’ve been as much as $1.25 cheaper just last year," Cochran said. He mentioned that some Haines fishing boats fuel in Skagway, as does the Haines to Skagway fast ferry.

Cochran mentioned also that Petro Marine does not charge sales tax on heating fuel. He said he routinely gets Haines residents bringing 55-gallon drums to Skagway by boat to fill up on heating fuel. Petro Marine heating fuel prices this week are $4.38 a gallon for No. 1 fuel and $4.28 for No. 2. The price through Delta Western in Haines this week is $4.50 for No. 1 and $4.48 for No. 2.

The borough is advertising a request for proposals for the harbor fueling operation, hoping a private entity will want to run and staff it. But Barrett said there has not been any interest yet.

"It might be difficult because the only time we really sell fuel is within the magical 110 days," Barrett said, referring to the commercial fishing and tourism seasons. The contract for the fuel operations would be year-round.

Petro Marine spokesperson Smokey Norton in Anchorage said the company hadn’t known about the request for proposals until the Chilkat Valley News called asking if the company was considering submitting a proposal.


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