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HomeMy WebLinkAboutThe Impact of Rising Energy Costs on Rural AK 1980INSTITUTE OF SOCIAL AND ECONOMIC RESEARCH UNIVERSITY OF ALASKA Fairbanks ¢ Anchorage ° Juneau PNG of maT p servites bot &LASEA ENE 049 | DATE ISSUED TO HIGHSMITH = #42-222L PRINTEDINU.S.A. THE IMPACT OF RISING ENERGY COSTS ON RURAL ALASKA by William E. Nebesky Oliver Scott Goldsmith and Teresa M. Dignan Institute of Social and Economic Research University of Alaska for Alaska Growth Policy Council November 11, 1980 OT BF EXECUTIVE SUMMARY Rising energy costs have sharply increased household expenditures on heating oil and electricity in rural Alaska. Between 1974 and 1978, the proportion of income spent on heating oil and electricity increased from 18.3 to 28.8 percent for Native households and from 10.4 to 16.4 percent for Native-plus-non-Native households in rural Alaska. Several factors affect the cost of fuel to rural consumers: e Whether heating fuel is shipped in bulk or packages (barrels or drums) e Whether heating fuel is stored in bulk tanks or in small household drums e Whether fuel is shipped via air or surface mode e Proximity of village to the distribution terminal at Dutch Harbor e Village size e@ Local availability of substitute fuel (e.g., wood) Between 1978 and 1988, the proportion of income spent on energy will continue to rise from 28.8 to 43.2 percent for Native households and from 16.4 to 24.6 percent for Native-plus-non-Native households in rural areas. This result is based on the following assumptions pertain- ing to rural communities over the projection period, 1978 to 1988: e Inflation-adjusted median household income is constant. e The inflation-adjusted consumer price of heating oil increases at 2 percent per year. e Inflation-adjusted electricity charges grow at 4 percent per year. e Median household heating oil and electricity consumption is constant at 1978 levels. e Household energy consumption is responsive only to changes in real income and not to changes in real (inflation-adjusted) energy prices. e Government fuel assistance and weatherization programs are not operating. Under the same assumptions, median energy expenditures as a pro- portion of household income in Fairbanks would increase from 5.7 to 8.5 percent between 1978 and 1988. Government fuel assistance and weatherization programs would reduce the household energy budget as a proportion of income by as much as 27 percent of 1988 levels. Under fairly optimistic circumstances, these programs would nearly reduce the 1988 proportion of household income spent on energy to real levels experienced in 1978. INTRODUCTION AND METHODOLOGY The question asked of this study is what the impact on real incomes in rural Alaska will be from changing energy prices over the next ten years. The indicator of the impact is defined to be the proportion of household income which must be spent on electricity and heating oil by rural Alaskans. This is a narrow definition of impact because changing energy prices will impact the prices of most goods consumed in rural as well as urban Alaska. For example, rising fuel prices have been a significant contributing factor to rising prices of farm commodities in recent years. In rural Alaska, the price of most goods and services consumed has a relatively and absolutely high transportation component. Thus, rising fuel prices will cause transportation costs to rise and, consequently, the cost of a large proportion of rural budgets. This effect may be one of the most important in future years. It would, for example, include construction costs since most materials are not locally supplied. It is not to be confused, however, with the direct effect on transportation consumption of changing fuel prices. In particular, this analysis has not estimated the effect of fuel price changes on the cost of operating boats, snowmobiles, etc. Another important component of changing energy prices on rural Alaska that is also not addressed under the scope of work of this study is the impact of energy price changes on the costs of public goods consumption. Two examples will serve to indicate the nature of this impact. First, public buildings must be lighted and heated. Just as an individual houshold has a budget, so too does the community, which is composed of taxes, transfers, and other revenues. When energy prices rise, the level of public services which can be provided falls. Another facet of this problem relates to the carrying cost of fuel storage. The carrying cost of inventory storage consists of the cost of the physical storage facility and the interest which must be paid on the loan to purchase the fuel. When the price of the fuel rises, the interest which must be paid also rises. (In times of escalating prices,.this cost may be difficult to anticipate and to plan for.) All of these other factors are important to take into consideration in policy discussion because they are all facets of the impact of changing energy prices. Concentrating only on the issue of the impact as narrowly defined in this study, however, requires a determination of estimates for the following factors which will affect the projected impact: 1. The current proportion of income of the average rural family which is spent on space heating and electricity for personal consumption. 2. Projection of the likely growth in average rural family income during the next ten years. 3. Projection of the likely growth in the average price of fuel in rural Alaska over the next ten years. 4. Estimate of the responsiveness of average family consump- tion patterns for space heating fuel and electricity to changes in real income and changes in the relative prices for fuel and electricity. 5. Determination of how existing government programs will change average family income (through transfer payments and subsidies) or consumption patterns (through weatheri- zation programs, etc.) when energy prices change. The small budget for this study precluded any primary data collec- tion, and, consequently, the methodology used has been to summarize and analyze that which had already been collected during previous studies. It has, thus, been necessary to draw broad inferences from a narrow data base in many instances, and the report should be interpreted with that caveat in mind. An estimate of the cost of space heating and electricity in Fair- banks as a portion of the total average family income in Fairbanks is also presented. Care should be taken in comparing this to the case for rural Alaska because of both different income concepts and dif- ferent consumption preferences in rural and urban Alaska. 2 PART ONE: HISTORICAL REVIEW As indicated in the Introduction, an estimate of the proportion of household income spent on fuel and electricity consumption in rural Alaska is a narrow definition of an energy budget. The household "energy budget" goes beyond expenditures on heating oil and electricity. It could also include warm clothing, outdoor wear, home insulation, and other energy-conserving implements that offset direct expenditures on fuel oil and electric power. In this report, the energy budget includes the cost of fuel oil for space heating and cooking and electric power for freezers, refrigerators, tools, machines, washers, lights, and appliances. Excluded are expendi- tures for gasoline (for transportation), kerosene, propane, and wood, unless explicitly mentioned. Further, the household energy budget excludes both lump-sum and ongoing disbursements for equipment such as household storage tanks and small diesel generators. How household income is defined is also important to the analysis. Here we define "household" income to include the many components of money income. They are: wages from employment, social security, Native crafts income, unemployment compensation, food stamps, and other types of government-sponsored income assistance. Not included are forms of "in-kind" income from subsistence and barter, which play an important role in the rural standard of living. Whenever possible, we distinguish between Native and all-rural (Native-plus-non-Native) household income in order to identify potential differences in energy impacts across rural households. The difficulty in building in other forms of energy (or conservation) expenditures and "in-kind" income lies in the highly variable effect of location and preferences on the value of these important, but nevertheless ancillary, items. It is well known that transport costs alone vary widely across remote areas of Alaska. Add to this location-specific preferences among rural communities with unique natural and energy resource endow- ments, and one is soon confronted with what economists call an "indexing" problem of formidable dimension. Figure 1 shows the geographic breakdown of rural areas under consid- eration in this analysis. They are the Arctic, Northwest, Interior, and Southwest regions. The Anchorage, Southcentral, and Southeast regions are excluded from the analysis. Table 1 shows median household expenditures for heating oil and elec-— tricity, median household income, and the proportion of income spent on heating oil and electricity for selected years between 1972 and 1976. The proportion of household income spent on energy varies from 17.0 to 22.1 percent, depending on the year and the definition of rural household. The findings in Table 1 suggest that the definition of rural house- hold income plays an important role in terms of the impact the household energy budget has on household income. Income and expenditures in col- umn one (statewide) refer only to Native households in Native and non- Native villages in rural Alaska. The data in column four indicate that in the Interior region Native household income was about 82 percent of that for all rural households in 1976. In part, the difference in income may be explained by the greater role subsistence plays in providing for household needs. Also, it is likely that wage employment opportunities for Natives are greater in non-Native places. Under the assumption that energy expenditures for Native households are roughly equal in Native and non-Native places, the impact of energy expenditures may be felt more strongly in pre- dominantly Native rural communities. Assuming that patterns of energy consumption were similar, the impact of energy expenditures was more pronounced in Native households (20.9 percent) compared with both Native and non-Native households in the Interior region (17 percent). peewee 3 4 5 6 7 8 9 10 . FIGURE 1. CENSUS DIVISION AND REGIONAL | A BREAKDOWN OF ALASKA A BARROW ~ ARCTIC | 2 8 YUKON-KOYUKUK LEGEND | © Places of 25,000 to 50,000 inhabitants outsice SMSA’s | INTERIOR | c C KUSKOKWIM SOUTHWEST 2 0 O BETHEL | BRISTOL BAY | to E \ BRISTOL BAY BOROUGH a 9 \ | | 6 - | 1 ALEUTIAN ISLANDS (PART) ° | Z *0 ‘s : wens Pax | | Fl be o | | J 6 7 TABLE 1. THE PROPORTION OF HOUSEHOLD INCOME SPENT ON HEATING OIL AND ELECTRICITY IN RURAL ALASKA bla ee Statewide b (Native) Northwest North Slope® Interior 1974 1972 1973 1976 Median Expenditures (current $) Heating Fuel 752 859 1,197 1,386 Electricity 232 302 287 228 Total 984 1,161 1,484 1,614 Median Household Income (current $) Native 5,367 os = 7,733 All Rural - 6,479 6,705 9,480 Proportion of Income Spent on Energy (percent) Native 18.3 - 7 20.9 All Rural - 17.9 22.1 17.0 aRobert R. Nathan Associates, Inc., 1976, 2(c) Report, 1976. Rowan Group, Inc., and Advocacy Planning Associates, 1973. “Dupere and Associates, Inc., 1974. duniversity of Alaska: The School of Agriculture and Land Resources Management and the Institute of Social and Economic Research, 1978. It is apparent from Table 1 that household income and energy expen- ditures vary widely across rural Alaska. The remainder of Part I is concerned with estimating for all of rural Alaska the proportion of household income spent on energy in 1974 and 1978. This requires that we generalize about the effects of regional differences on patterns of energy consumption, price, and income. Those factors which most strongly influence regional variation in energy prices and, to some extent, consumption and household income are discussed in connection with our estimates of the average prices of heating oil and electricity, median household energy consumption, and median household income. We are most concerned with how proximity to major ports and waterways affect the method, frequency, and cost of distributing, transporting, and storing fuel in rural Alaskan communities... We also consider how village size, climate, and local availability of substitute fuels influence the pat- tern and cost of energy in rural Alaska. Heating Oil Substitute fuels. The quantity of oil consumed for space heating can depend in part on the availability of substitute fuels. In Kotzebue, where barge service is available about four months of the year, 121 out of 129 households surveyed in 1978 (ISER printout) did not burn wood for space heating. By comparison, in the Yukon-Porcupine region of the Interior, where barge service is more expensive and air service is sometimes required, most households consumed wood to satisfy some or all of the household space heating requitensite.” The role of substitute fuels may be important in the Interior where the energy budget for all rural households is a smaller proportion of income than in the North Slope and Northwest regions. The high cost of diesel fuel in the Interior limits the extent to which diesel-generated electricity is produced.? In the Interior region, blazo or propane is often used to operate household appliances in place of higher-cost, but more efficient, electric power (Agriculture Experiment Station and Institute of Social and Economic Research, 1978). Climate. Table 2 shows the relationship between climate, heating cost, and median income for Native households in 1974 by Native Corpora-— tion regions. The data in Table 2 suggest that regional differences in the proportion of income spent on heating fuel are not particularly striking. With the exception of the Aleut region (Cold Bay), which has an unusually high median household dietai, the space heating expenditures, as a proportion of Native household income, range from 11.4 to 14.7 percent. The effect of climate on the energy budget's impact on income is unclear. The ratio of annual heating cost to he«"ing degree days in column three is highest for the region having the lowest number of heat— ing degree days. It is more probable that the relatively high heating oil expenditures in the Aleut region reflect the combined effects of higher household income and proximity to a nearby distribution terminal at Dutch Harbor. Higher incomes imply a greater ability to pay and tend to encourage more consumption (i.e., the income effect). Also, Dutch Harbor represents a principal distribution center for petroleum shipments to both coastal and interior regions of western and central Alaska. Available evidence suggests that heating fuel is available at less cost to communities in the proximity of Dutch Harbor. Lower-priced heating fuel could encourage higher fuel consumption demand in the Aleut region. Transportation and Packaging. Because the wholesale purchase price of heating fuel at Dutch Harbor is the same for all carriers destined for different Alaskan ports, the factors which most strongly differentiate the final consumer price include the surcharge for transportation from Dutch Harbor to the destination point and inventory costs specific to each community. The final cost of fuel may depend more critically on whether or not it is shipped in bulk or in package form rather than the actual distance from the major terminal. As shown in Table 3, bulk transport tariffs as of July 1980 for selected communities in Southwest Alaska vary from a low of 16 cents per gallon to a high of 44 cents, depending on distance Aleut Calista Bering Straits Bristol NANA Doyon TABLE 2. (1) Annual Heating® Degree Days 9,865 13,203 14,325 11,582 16,036 15,925 ANNUAL HEATING DEGREE DAYS, HEATING COSTS AND MEDIAN HOUSEHOLD INCOME FOR SELECT NATIVE CORPORATION REGIONS IN 1974 (2) (3) (4) (5) Annual Household Median Household Heating Cost (2) + (1) Income (2) + (4) $857 8.7¢ $11,312 7.6% 548 4.1 3,725 14.7 849 5.9 6,565 12.9 827 7.1 6,621 12.5 949 5.9 8,311 11.4 610 3.8 5,130 11.9 “Degree days measure the departure of mean daily temperature from a given standard, one degree day for each degree of departure above or below the standard during the day. degree days is 65° F. The measures in column one are annual averages over a twenty-year period. SOURCE: Robert R. Nathan Associates, Inc., 1976, Table 20, pp. 75-76. The standard for heating shipped and whether fuel is contained in bulk or in packages (i.e., drums or barrels). The tariffs on packaged heating oil range from $.38 to $1.07 per gallon for respective communities. On average, tariffs on packaged shipments of heating oil in Southwest Alaska are about twice as large as tariffs on bulk shipments having the same origin and destination. TABLE 3. TARIFFS FOR SHIPPING BULK AND PACKAGED HEATING OIL FOR SELECTED COMMUNITIES IN SOUTHWEST ALASKA IN 1980 (3) Packages as a Percent (eB (2) of Bulk Bulk Package (2) + (1) ($/gallon) ($/gallon) (percent) Atka vat 1.07 345 Atmant lauk -16 -38 237 Chefornak ~25 -51 204 Chevak 28 74 378 ——Goodnews Bay : - 265 -45 173 Kasigluk 17 -38 223 Kwigillingok «225 44 200 Pilot Station sad -716 266 Quinhagak «225 414 184 Russian Mission 437 621 142 __-Togiak 132 1.071 334 SOURCE: Rural CAP As in the case of transportation, the manner in which fuel oil is stored at the community site is an important determinant of household fuel oil costs. It is well known that many rural communities become "ice-locked" for six-to-eight months each year. Barge transport, the principal mode of fuel oil transportation for both coastal and interior communities, is 10 limited to summer months (when heating oil demand is low).° Households, schools, and other facilities that require heating oil (or gas) must stockpile fuel oil during the offseason. This requires up-front cash outlays for large advance purchases of fuel and for bulk storage tanks. In order to reduce the high transport surcharge for packaged fuel oil, some communities have recently converted to bulk fuel storage tanks from a system that consisted essentially of small, individual household tanks or drums. Central bulk storage facilities, more common in rural Alaska, were introduced primarily to cut down on rising shipping costs and may also decrease actual inventory costs per household. In most cases, bulk storage capacity is still not sufficient to handle annual fuel needs. For example, total annual fuel requirements in the North Slope exceeded storage capacity by 35 percent in 1978.° In some cases (e.g., Atkosook), bulk storage capacity was not available, requiring high-cost packaged shipments or even air transport of fuel oil. As shown in Table 4, those rural communities in the Yukon~Porcupine region that did not have bulk storage facilities in 1976 paid on average 59 percent more per gallon than communities in the same region with bulk storage. This again may reflect lower transport surcharges for bulk fuel as opposed to actual savings in reduced bulk storage inventory costs. Other factors such as community size and fuel transfer requirements from freighter to barge will also affect the consumer price of fuel. Transport economies for larger shipments lower the unit cost (cost per gallon) of heating oil. For example, in 1978 communities of greater than 385 people (the average size for the communities sampled in South- west) paid an average of 77¢ per gallon, compared with $1.10 per gallon paid by Southwest communities smaller than 385 persons. 11 TABLE 4. FUEL OIL COST DIFFERENCES FOR INTERIOR COMMUNITIES WITH AND WITHOUT i BULK STORAGE IN 1976 ; Fuel Cost Population Average Fuel Cost Community ($_per bbl) ($_per bbl) With Bulk Storage 45.39 Birch Creek 50 40 Fort Yukon 45.10 637 Without, Bulk Storage 72.36 Arctic Village 88 148 Beaver 49.50 82 Chalkyitsik 68.75 92 Circle 55 45 Stevens Village 49.50 80 Venetie 88 160 SOURCE: University of Alaska School of Agriculture and Land Resources Management and the Institute of Social and Economic Research, 1978, pp. 17-22. Price. It is evident that at any point in time the consumer price level of heating oil in rural Alaska varied considerably as a result of many factors. Other than to say that prices increased during the mid- to-late 1970s, a clear rate of growth does not emerge. Average fuel prices over the entire AVEC system grew at about 12 percent per year from 1974 to 1976, dropping to 10 percent between 1976 and 1978. In contrast to this, fuel prices grew at about 2.8 percent per year in Fairbanks over the same period. A midpoint of about 6 percent can be applied to the average price per gallon of $1.05 for Interior Alaska in 1976 to derive an average price per gallon of $1.18 in 1978. This 1978 price is consistent with fuel oil data on consumption and expenditures, is considered representative as an average for all rural households, and is used in subsequent analyses. 12 Consumption. In addition to price, heating oil comsumption in rural Alaska varies widely across regions. Estimates of household fuel consumption have been pieced together from several secondary data sources in Table 5. The estimates vary from a low of 15 gallons in the village of Beaver in Interior Alaska to as much as 290 per month in North Slope communities. In view of this range, any attempt to generalize about average household fuel consumption runs the risk of considerable inac- curacy, particularly in light of the questionable reliability of exist- ing data. In spite of these objections, we used the results from the Alaska Public Forum NANA Survey (ISER, 1979) to approximate monthly average household fuel consumption in peak winter months. Data on household fuel consumption in Wainwright (Alaska Consultants, 1980) suggest that summer fuel consumption falls to roughly 60 percent of winter consump- tion. Combined with the NANA survey results, the Wainwright data suggest that on average, rural households consume roughly 110 gallons of fuel oil per month or about 1300 gallons per year. A comparison of this result with household consumption and expenditure data from Table 1 suggests that this result is reasonable. If, for example, we apply this figure to median household heating fuel expendi- tures in 1976 in Interior Alaska, the average consumer price of fuel in that region should have been about $1.05 per gallon. This result is con- sistent with fuel-cost data in Yukon-Procupine villages (University of Alaska, School of Agriculture and Land Resources Management and the Institute of Social and Economic Research, 1978). Averaging 600 square feet of floor space (Retherford, 1975), rural village dwellings comprise roughly one-half the surface area of a "typical" Fairbanks house (Community Information Center, 1980). At twice the surface area, the typical Fairbanks house requires about 1500 gallons of heating oil annually, or about 15 percent more fuel. 13 TABLE 5. Source ISER NANA Survey 1979 Alaska Consultants 1980 Construction Systems Mgmt., Inc., 1979 Yukon-Procupine Regional Planning Study, University of Alaska, 1978 Community Infor- mation Center Special Report No. 7, 1980 ALTERNATE MEASURES OF HOUSEHOLD HEATING OIL CONSUMPTION Region Period Findings (per household) Northwest January 1978 Do burn wood: 112 gallons/month Do not burn wood: 138 gallons/month Wainwright 1980 Winter: 177 gallons/month Summer: 104 gallons/month North Slope 1978 292 gallons/month Borough Interior 1976 Beaver a Bebbade 15 gallons/month Birch Creek: 104 gallons/month® Fairbanks 1980 125 gallons/month? *T assume an average of 5 persons per household, based on 1970 Census of Population Data (See U.S. Bureau of Census, 1970). applies to a "typical" Fairbanks household. 14 See Appendix A for details. The heat-retention efficiency and overall quality of houses in small rural communities, however, are generally well below the standards assumed above for the typical Fairbanks household (see Appendix A for details). For example, in the 1974 survey of Native views (2(c) Report, 1976), Natives in the Bering Straits Region clearly identified and empha- sized poor housing and lack of utilities as the most pressing of village problems (Task III, Part B, Section 1, p. 26, Table 2D-6). Indeed, according to Richardson (1979), most of the 1,500 Seward Peninsula homes are substandard. Between 1969 and 1979, -ASHA, BIA, and HUD provided funding for the construction of 400 new homes in their region. Richardson, however, notes that ". . . quality control problems in the design and construction of these houses [has given them] a reputation for being cold and difficult to maintain... ." Thus, it is not surprising to observe that even though the average household in rural communities is roughly half the size of a typical Fairbanks home, heating fuel requirements are not cut in half. In what follows, I assume that the level of household heating fuel consumption between 1974 and 1978 remains constant at 1,300 gallons per year, unless explicitly stated otherwise. Thus, only changes in fuel prices can cause real changes in the proportion of income spent on energy. There are strong indications that new homes built in rural Alaska between 1974 and 1978 are larger than old ones. Many of the units built through assisted housing programs were planned to accommodate the com- paratively large size of Native families. We believe that the effect of an increasing number of larger-size houses since 1970 is captured in the data used to derive the estimate of annual rural household fuel consumption. If growth in assisted housing 15 programs does not accelerate dramatically and if strict quality-control standards are followed for planned and future construction, then it is reasonable to assume that fuel oil consumption demand will stabilize at an average rate of 1,300 gallons per year for rural households. Implicitly, we assume that the effect of family size on public housing programs will not influence the average level of heating oil demand in the near future. The product of 1,300 gallons and our estimate of $1.18 per gallon gives an annual average heating bill of $1,534 for rural households in 1978. Electricity Because electricity is produced primarily by deisel-powered genera- tors, regional differences in the cost of electric. power in rural Alaska are caused, in part, by the same factors that influence resident heating costs in different parts of the state. They are the following: e Whether or not fuel is shipped in bulk or in packages (drums or barrels); e@ the method and frequency of transport; e village size; and @ to some extent, climate. Electricity cost and use varies widely across rural Alaska. As shown in Table 6, average annual household electric power consumption in 1976 ranges from a low of 1,369 KWH in Fort Yukon to a high of 5,692 KWH in Naknek. In general, the data imply an inverse relationship between the cost and use of electricity; villages with higher cost electricity tend to consume less. Note that Alaska Village Electric Cooperative (AVEC) communities paid a higher charge per KWH than non-AVEC communities in the Arctic, Southwest, and Northwest regions, combined. 16 On average, AVEC communities tomers, which accounted for about sales between 1974 and 1976. The commercial power demand, schools, Data on family size for 1978 size of AVEC villages is about one Southwest, and Northwest communiti are able to produce electricity wi which may explain the higher elect TABLE 6. REGIONAL PATTERN included about 45 residential cus- one-third of total village electricity remaining two-thirds were produced for street lights, and other users. indicate that the average resident —third the size of the other Arctic, es in Table 6. Larger communities th larger, more efficient generators, ricity costs in the AVEC system. S IN ELECTRICITY USE AND COST 1976 Electricity Number of Region Village Household? Interior Fort Yukon 147 Arctic Kotzebue 410 Southwest Dillingham 200 Naknek 45 Northwest McGrath 87 AVEC 48 Villages 54/3 Regional Alaska Consumption Bill Charge KWH/Customer $/Customer ¢/KWH 1,369 302 22e% 5,188 764 14.7 4,310 548 12.7 5,692 617 10.8 2,346 s22 13.7 a 1,876 391 20.8 2,841 465 16.4 10,238 394 3.9 “Based on average family size in 1978 (Alaska Division of Energy and Power Development, 1979). SOURCE: Arthur Young and Co., 1979, Appendix II, p. 63. 17 In the Alaska Village Electric Cooperative, diesel fuel is a principal and growing contributor to the total cost of producing elec— tric power, increasing from 31 to 37 percent of total costs from 1978 to 1979. The remaining costs components are displayed in Figure 2, reproduced from the AVEC 1979 annual report. Between 1974 and 1976, average total AVEC fuel costs per gallon grew at an average annual rate of 8.6 percent a year (from 52 to 97 cents per gallon). Over the same period, the residential cost per KWH increased from 19.3 to 35.8 cents, or about 15 percent per year. Dispite rapidly rising costs, average annual household consumption grew from 1,446 to 2,076, or 9.5 percent per year over the same period (see Table 7). TABLE 7. ELECTRICITY COSTS AND CONSUMPTION IN AVEC 1974 and 1978 Diesel Fuel Residential Average Annual Cost Electricity Costs Household Consumption ($/gallon) (¢/KWH) (KWH) 1974 $ .52 19.3¢ 1,446 1978 -97 35.8¢ 2,076 Average Annual Rate of Growth 8.6% 15% , 9.5% This rather astounding rate of growth in residential electricity consumption may be explained, in part, by an increasing dependence on electric appliances. Table 8 shows that households in the AVEC system increased their overall use of various electric appliances between 1974 and 1978. This rising consumption pattern could also reflect the effect of growing non-Native in-migration into rural, and often traditionally Native, communities over the period. 18 FIGURE 2 TOTAL COST OF ELECTRIC SERVICE, BY ITEM BOARD- DELEGATES-1% “INSURANCE 2% DISTRIBUTION \\GPERATION & HAINTENANCE CONSUMER ACCOUNTS 6% ADMINISTRATION & GENERAL INTEREST propucron 3% 5 % PLANT OPERATOR, MECHANICS, PARTS, ETC. 19 % FUEL OIL 37 % ; 70% CALENDAR YEAR 1979 ALASKA VILLAGE ELECTRIC 19 CO-OPERATIVE TABLE 8. ELECTRICITY CONSUMPTION AND AVEC HOUSEHOLD USE FOR SELECTED APPLIANCES : 1974 Survey” 1977 Survey” Appliance KWH/Year®™ Percent of Returns Percent of Returns Range 1,200 5 7 Freezer 1,560 66 81 Refrigerator 1,800 29 41 Washer and Dryer 6,240° 73 81 Television 600 aan 51 Lights 1,200 -- _ "Institute of Social and Economic Research, 1976, Table 3-40, p- 3-110. >robert Retherford Associates and Arthur Young and Co., 1977, Exhibit II-3, p. II-20. “Includes 4,800 KWH/year for the use of hot water in a clothes washer. In order to identify average household use and the growth in rural electricity demand by residential customers between 1974 and 1978, we have compiled estimates of household consumption from several sources in Table 9. Three distinct patterns emerge from the data. First, household electricity consumption in Fairbanks, as a proxy for urban demand, exceeds household consumption in smaller rural communities any- where from three to eight times. Second, AVEC-system households consume far less electricity than non-AVEC rural households. For example, in 1976 monthly electricity consumption in the AVEC system averaged 121 KWH per household. This level represents about 55 percent of non-AVEC house- hold consumption which varied from 321 KWH in Port Graham to 150 KWH in McGrath and averaged 219 KWH. The proportion of average AVEC-household 20 TZ TABLE 9. ELECTRICITY CHARGES AND CONSUMPTION IN RURAL AREAS FROM 1974 TO 1978 Region, District, KWH/Customer ¢/KWH Data Source or Community Period Per Year Per Month AVEC Annual Reports AVEC 1974 1,446 121 19.3 48 Villages 1976 1,876 156 20.8 1978 2,076 173 35.8 1979 1,998 167 39.0 ISER, 1976 Craig 1974 2,609 217 - Unalakleet 2,132 178 - McGrath 1,796 150 - Port Graham ; 3,857 321 - Tok 3,065 255 - Average 219 R. Rutherford Assoc., 10 Southwest 1975 1,751 146 - 1975 Communities Arthur Young and Arctic, Northwest, 1976 4,640 387 13.8 Company, 1979 and Southwest ISER, 1980 Fairbanks 1974 11,596 966 5.4 1978 10,153 846 6.0 “Weighted by 1978 village population. consumption to average consumption in non-AVEC households dropped to only 40 percent in 1976. Third, although household electricity use varies widely among the three somewhat distinct groups of users (AVEC, non-AVEC, and Fairbanks), the data suggest that residential electricity consumption across all groups is converging. Households that used more electricity during the 1970s experienced the greatest reduction in the latter part of the 1970s. For example, as shown in Table 10, electricity consumption in Fairbanks households experienced an average reduction of 3.4 percent per year between 1974 and 1978, reflecting a shift away from electric space heating. Although average household electricity consumption continued to grow in the AVEC system, the rate of growth has steadily declined after 1976. In fact, between 1978 and 1979, AVEC households experienced an absolute decline (as opposed to less rapid growth) in the average quantity of electricity consumption. TABLE 10. AVERAGE ANNUAL GROWTH IN ELECTRICITY CONSUMPTION 1974-1976 1974-1978 AVEC 13.7 9.3 Fairbanks 4.1 -3.4 In view of this decreasing trend, average household electricity consumption will probably not experience much growth in the foreseeable future. It is possible that a gradual reduction in household electricity consumption could offset rising community demand for electric power in response to an increasing number of households. The effect of non- increasing village demand on the cost of providing electricity is unclear. On the one hand, a constant level of demand could reduce pressure on the need for utilities and electric associations to expand power capacity as rapidly as would otherwise be necessary. On the other hand, villages 22 are relatively small and typically have few users with which to spread the total cost of producing electricity for the entire community. Therefore, even small reductions in village electricity demand could force significant cost increases for the remaining users. This problem is particularly acute when relatively large users such as grocery stores or schools shut down or seek alternatives to the high cost of existing electricity supplies. Despite the possibility of stabilized household demand and reduced pressure on facilities expansion, electricity prices are likely to continue to rise in response to ongoing operations and maintenance requirements (about 25 percent of AVEC system costs) and rising fuel prices. Note that AVEC charges per KWH increased dramatically at about 17 percent per year from 1974 to 1978 (see Table 9). In comparison with AVEC, the average charge per KWH to residential customers in Fairbanks increased at 4 percent per year over the same period. In what follows, we assume that rural household electricity consump— tion stabilizes at an average level of 219 KWH per month (2,628 KWH/year) represented by non-AVEC households in 1974. This level is consistently greater than average AVEC household consumption from 1974 to 1978. As shown in Table 9, electricity consumption in the AVEC system is probably below the average level for rural households over all. Nevertheless, 219 KWH per month may represent an upper limit for future household demand as rising electricity costs continue to reduce incentives to increase household electricity consumption. To approximate the cost per KWH of residential electricity in rural areas, the 1976 average charge of 16.4 cents is allowed to grow at 4 percent” per year, yielding 17.7 cents per KWH in 1978. The product of 2,628 KWH per year and 17.7 cents per KWH gives an annual total cost of $465 in 1978. 23 Household Income As shown in Table 11, between 1974 and 1978 the growth in nominal total resident and per capita income varied widely across rural census divisions in Alaska. Differences in regional income growth, as depicted in columns 5 and 6, suggest that no clear pattern characterizes all rural areas combined. The average annual growth in total resident income ranges from -6.9 to 8.4 percent per year. Per capita income growth is consistently less than that of total resident income, reflect- ing an expanding rural population. The large variation in regional income growth reflects, in part, the importance of local development activity in the rural economy. For example, the absolute decline in total resident and per capita income in the Upper-Yukon probably reflects the sharp decline in pipeline-related wages and salaries after 1976. Marked income increases in Bristol Bay most notably reflect expanded fisheries employment in response to record salmon runs in the late 1970s. Despite wide geographic variability in income growth, there are several demographic factors which characterize the economic potential of rural communities. In general, there are few permanent employment prospects in rural Alaska. Many development projects occur in enclaves that remain separate from the local communities. Local employment oppor- tunities that are created are often taken by better-skilled in-migrants. The rising dropout rate among Natives, combined with out-migration of more educated persons from villages to urban areas, further reduces the potential for real income growth in rural communities. Further, in addition to the effect of rising energy costs, the economic base in rural Alaska generally lacks stability as a result of rising user fees associated with large public works projects which require substantial ongoing maintenance. Consequently, although nominal per capita income grew at an annual average rate of 5.2 percent for all of the rural 24 SZ TABLE 11. GROWTH IN NOMINAL INCOME BETWEEN 1974 and 1978 BY CENSUS DIVISION IN RURAL ALASKA 1974 Income 1978 Income Average Annual Growth Total Resident Per Capita Total Resident Per Capita in Nominal Income (percent) (millions of (millions of current $) (current $) current $) (current $) Total Resident Per Capita Aleutians 66.3 8,307 92.5 11,420 8.7 8.3 Bethel 35.8 4,093 49.7 4,970 8.5 5.0 Bristol Bay 14.0 3,659 21.6 5,023 11.5 8.2 Kuskokwim 13.2 5,016 10.1 3,607 -6.9 -8.6 Wade Hampton 15.2 3,394 16.2 3,375 1.6 -0.1 Kobuk 20.2 4,838 28.4 5,680 8.9 4.1 Nome 32.0 5,161 48.2 6,789 10.8 7.1 Upper Yukon 15.3 10,992 11.9 7,438 -6.5 -10.3 Yukon Koyukuk 29.1 5,603 57.7 9,780 18.7 14.9 Southeast Fairbanks 29.9 6,645 39.5 7,453 7.2 2.9 Average 8.4 5.2 Fairbanks 373.2 7,864 634.8 11,734 14.2 10.5 Statewide 2436.2 7,137 4369.8 10,851 15.7 11.0 SOURCE: "Numbers: Basic Economic Statistics of Alaska Census Divisions," Alaska Division of Commerce and Economic Development, 1979. census divisions under consideration between 1974 and 1978, it is prob- able that real household income declined. The cost of living in Anchorage, Alaska, grew at an average annual rate of 8.8 percent over the same period. This implies a substantial real decline in per capita income of at least 3.6 percent per year in rural areas. The shortcomings of using the Anchorage consumer price index to adjust incomes in rural areas are twofold. First, goods and services consumed in the bush have a transportation and distribution surcharge that is added onto the retailer's margin. The larger the transportation cost component as a proportion of total cost, the larger the overall price rise when transportation tariffs are increased. Further, rising energy prices indirectly impact the cost of living in rural areas by increasing fuel-dependent transport tariffs. The impact on rural areas of this indirect, transport-induced cost of living increase is not likely to be captured in the Anchorage consumer price index. Second, interregional cost differences exist "within Alaska that are greater than differences between Alaska and the Lower Forty-eight States" (Scott, 1977). In Table 12, average family budget costs in 1976 are indexed by school district for several househoid budget items. Based on an Anchorage index of 100 percent, the energy budget as reflected in the shelter index for rural districts such as Dillingham, Galena, and Nome is consistently higher than all other budget items. Between 1970 and 1978, the cost of living in Anchorage grew less rapidly at 6.9 percent per year, than from 1974 to 1978. This implies that inflation accelerated during and immediately after the period of peak pipeline employment in 1976. We applied this less rapid growth in the cost of living to the growth in nominal income between 1974 and 1978, under the assumption that the lower rate is more representative of long-run trends. Real total resident income increased at a modest 1.5 percent per year. However, average real per capita income still experiences a real decline between 1974 and 1978. 26 LZ District or TABLE 12. Food Price + . Shelter 100.0 122.7 | 232.2 123.6 211.6 110.9 107.0 113.6 121.5 107.8 132.9 Alaska Interregional Differentials. INDEX OF AVERAGE FAMILY BUDGET COSTS FOR 1976 Housin “ tndex 2 Furnishings 100.0 104.1 100.5" 102.3 105.0 100.0 105.0 107.7 * 106.8 101.5 98.0 104.3 104.8 96.2 116.7 "101.5 99.5 100.0 100.0 108.8 110.3 107.7 99.0 111.8 99.0 107.7 106.3 117.1 108.8 107.3 99.8 Operations 100.0 123.5 141.6 116.8 160.0 105.1 95.7 *‘lio.s 100.9" 114.8 107.3 116.0 160,4 165.6 101.3 103.4 179.0 113.0 100.4 133.0 and Economic Research, 1977), pp. 64-67. REAA and Place Index District Schools Anchorage 100.0 Bristol Bay -- (Naknek-K. Salmon) Cordova 123.5 Craig -- Dillinghan 141.6 Fairbanks 116.8 Galena. 160.0 Haines 105.1 Hoonah -- Hydaburg eo Juneau . 95.7 * Kake : -- Kenai 110.8 (Kenai-Seward- Seldovia-Homer) Ketchikan 100.9 King Cove -- Klawock im 114.8 107.3 116.0 160.4 North Slope 165.6 (Barrow) Pelican -- Petersburg ren Sclawik -- Sitka 101.3 Skagway 103.4 St. Marys 179.0 Unalaska -- Valdez 113.0 wrangell 100.4 Yakutat 133.0 SOURCE: Michael Scott. Notes: Shown on following page. us Transportation Index 100.0 39.6 123.1 112.4 151.4 102.3 93.3 127.3 119.3 120.2 100.0 148.7 114.0 99.9 156.5 113.9 138.3 113.3 120.1 . 164.3 . 116.8 55.4 131.9 140.2 124.3 129.1 116.8 258.1 118.9 128.4 69.1 5 Personal Composite Medical Total Clothing Care Care Consumption Index Index Index Index 100.0 100.0 100.0 100.0 100.0 -- 100.0 - 100.0 123.5 100.0 114.8 100.0 -- 100.0 — 100.0 141.6 100.0 160.0 100.0 116.8 100.0 113.4 100.0 160.0 100.0 155.0 100.0 105.1 100.0 108.2 100.0 -- 100.0 _ 100.0 -- 100.0 a 100.0 95.7 100.0 100.2 100.0 -- 100.0 fin 100.0 110.8 . 100.0 109.6 100.0 100.9 100.0 101.0 100.0 -- 100.0 brad 100.0 -- 100.0 bead 100.0 114.8 100.0 112.6 100.0 107.3 100.0 104.0 100.0 116.0 100.0 113.5 100.0 160.4 100.0 167.5 100.0 165.6 100.0 166.3 100.0 - 100.0 aa 100.0 100.0 Peta! 100.0 -- 100.0 — 100.0 101.3 100.0 104.2 100.0 103.4 100.0 _ 100.0 179.0 100.0 - 100.0 -- 100.0 ea 100.0 113.0 100.0 113.5 100.0 100.4 100.0 105.6 100.0 133.0 100.0 118.9 (Anchorage: Institute of Social Table 12: Notes a. Source: Alaska Division of Personnel and Labor Relations, Survey of Food and Housing Costs (Draft), November, 1976. The housing index is based on three component parts: shelter (2 bed- room house mortgage principal and interest at 9 percent on 25-year standard mortgage, taxes, insurance, heating fuel, and electricity); furnishings (based on an annual $200/100 pound mail order, shipped from Seattle by air freight); and household operations (cleaning supplies purchased through local retail food outlets). Sources of data: U.S. Department of Housing and Urban Development, "Low Rent Public Housing Prototype Cost Limits" Federal Register, Wednesday, June 9, 1976; U.S. Department of Housing and Urban Development, San Francisco Regional Office, Selection of Utilities for Subsidized Housing in Region IX, December 1972 (Adjusted to Alaska conditions by the Anchorage HUD staff); Alaska Public Utilities Commission Annual Report, December 1975; Alaska Energy Office, Standard Oil Company of California, First Federal Savings and Loan of Anchorage, relevant airlines (see note 3). Local transport is based on local operation of a car; alternatively a snowmobile and/or boat. (Source: ratio of 4 wheel, poxered vehicles to population from Alaska Department of Highways and Department of Community and Regional Affairs, Alaska Taxable 1975.) Intercity transportation assumes the 1976 equivalent of two trips by air per year for three adults and oné child to the nearest major regional center: Anchorage, Fairbanks, Juneau, Ketchikan. Sources: Alaska Airlines, Wien Air Alaska, Reeve Aleutian Airways, Western Airlines, Polar Airlines. Exceptions were monthly car trips from Nenana, Clear, Palmer, and Whittier. Clothing costs are based on mail order costs from Seattle, delivered parcel post. Source: Sears, Roebuck and Company. Personal care is dominated by costs of toilet articles sold through retail grocery chains. Medical care costs are dominated by medical insurance costs, which do not systematically vary by location in Alaska. Source: Blue Cross Washington-Alaska. : 7 The weights atteched to each index are based on the BLS budget pro- portions of an Anchorage intermediate income family of 4. The ad- justed weights, as a percent of consumption, are: Food -305 Shelter 2295 Furnishings +052 Operations O41 Transport 100 Clothing 089 Personal Care +031 Nedical Care - 086 Total -999 Source: U.S. Bureau of Labor Statistics, BLS Revised Estimates for Urban Family Budgets and Comparative Indexes for Selected Urban Areas, Autumn, 1975. 28 Even if we abstract from interregional cost differentials and use the Anchorage consumer price index as a proxy for changes in the cost of living in rural areas, it is unlikely that household income in rural Alaska has increased between 1974 and 1978. To calculate median household income in 1978 for Native households and for all households in rural Alaska, the average and rate of growth in nominal, per capita income for rural census divisions in Alaska is applied to Native and to all-rural median household income for which actual data exist in 1974 and 1972, respectively. The historic data on median household income are taken directly from Table 1. As shown in Table 13a, separate growth rates are applied since actual data on median household income were available in different years for Native and all- rural groups. The growth rates themselves are derived from Bureau of Economic Analysis (BEA) data on nominal per capita income for the same census divisions used in Table 11. These data on resident income and population are summed over respective census divisions and shown in Table 13b. Our estimates of median household income for Native and all-rural households in 1978 must be interpreted with caution for several reasons. First and foremost, they are point estimates that cover large geographic regions having important dissimilar physical and demographic character- istics. Second, projected household incomes in Table 13c are derived indirectly from different secondary sources which most likely used dif- ferent estimation techniques and assumptions. Third, all-rural house- hold income (Native-plus-non-Native) in 1972 refers to rural inhabitants in Northwest Alaska; whereas, Native household income draws from state- wide data. 29 TABLE 13a. AVERAGE ANNUAL GROWTH IN NOMINAL PER CAPITA INCOME Percent 1972-1978 a1 1974-1978 6.6 TABLE 13b. TOTAL RESIDENT AND PER CAPITA INCOME FOR SELECTED RURAL CENSUS DIVISIONS,? 1972-1978 1972 1974 1978 Total Resident Income 169.0 271.0 375.8 (millions of current $) Total Resident Population 44.0 48.5 52:0 (thousands of persons) Per Capita Income 3,841 5,588 Lead: (current $) 4census Divisions include Aleutians, Bethel, Bristol Bay, Kobuk, Kuskokwim, Nome, Southeast Fairbanks, Upper Yukon, Wade Hampton, and Yukon-Koyukuk. SOURCE: Numbers: Basic Economic Statistics of Alaska Census Divisions, Division of Commerce and Economic Development, DEE, 1979. TABLE 13c. MEDIAN INCOME FOR NATIVE AND NON-NATIVE RURAL HOUSEHOLDS Median Household Income in Current Dollars Actual ; Estimated 1972 1974 1978 Native = 5,376" 6,953 Non-Native 6,479° -- 12,191 3Manpower Development and Community Survey Reports," 1974, Dupere and Associates, Inc., Juneau, Alaska. brhe Cost of Living in Alaska and Federal Poverty Guidelines," 1976, Robert R. Nathan Associates, Inc., Washington, D.C. 30 Summary Table 14 summarizes the preceding discussion of household energy expenditures and income from 1974 to 1978 in rural Alaska. Many of the figures in Table 14, particularly in 1978, are not derived through conventional sampling techniques and, therefore, retain few, if any, statistical properties. Instead, these figures are based on trends in household energy costs, in consumption patterns, and in income growth that have been adjusted in some cases to reflect conditions unique to rural village lifestyles and living standards. Most importantly, the figures in Table 14 are generalized to reflect energy costs and house- hold income across vastly different communities throughout rural Alaska. No attempt was made to distinguish between the energy budget of Native and all-rural households. Whereas distinct differences do appear in median household income among Native and non-Native groups in rural Alaska, there is not much evidence to indicate that similar trends or differences in heating oil and electricity expenditures distinguish Native and non-Native households. Although household heating oil and electricity expenditures in 1974 pertain specifically to Native house- holds, I assume that it applies to non-Native and, therefore, all-rural households as well. One could argue that Natives might be expected to spend less on heating oil and electricity than non-Natives by virtue of lifestyle differences alone. According to 1974 Native survey results, median household income for Natives in predominantly non-Native places is almost twice as large as median Native household income in strictly Native villages. Spending patterns should also be expected to differ between Native households in Native and in non-Native places that exper- ience such divergent levels of income. Further, one might also expect that household energy budgets differ even more between Native and all- rural households. There is currently no evidence available, however, that compares energy budgets between alternative definitions of rural households to 31 TABLE 14. THE PROPORTION OF INCOME SPENT ON ENERGY IN RURAL ALASKA IN 1974 AND 1978 . 1974 1978 Household Expenditures (current $) Percent Percent Heating Oil yan 76 1,534 77 Electricity 232 24 465 aa Total 984 100 1,999 100 Household Income (current $) Native 5,367 6,953 All Rural 9,441 12,191 Proportion of Income Spent on Heating Oil and Electricity (percent) Native 18.3 28.8 All Rural 10.4 16.4 32 support this reasoning. Income variation between different kinds of rural households does not necessarily imply that energy expenditure patterns must vary in a similar fashion, particularly for an item as important and necessary as heating oil. Further, it is possible that although lifestyle differences between Native and non-Native households may indeed suggest that the average Native household is less energy- intensive than the non-Native neighbor, it is equally as possible that non-Native families and individuals may operate more effectively in an increasingly westernized social and economic structure. For example, b better understanding how to secure commercial or state financing, a non- Native household may be able to purchase insulation, a wood stove, or a snowmobile to haul wood as a substitute for high-cost fuel oil. Further, strictly Native communities are typically smaller in size than mixed Native and non-Native communities and may incur higher unit costs for smaller bush shipments of heating oil and less smaller, less efficient diesel generators. These arguments suggest that the distinction between energy expendi- tures in rural-Native and all-rural households.is not clearly understood. Until more thorough cross-section analyses are performed that compare Native and non-Native energy expenditure patterns in greater detail, we maintain the assumption that countervailing tendencies create a more or less even distribution of heating oil and electricity expenditures between Native and non-Native households. Consequently, a different median level of household income is the only distinguishing feature in the analysis of how energy impacts differ between Native and all-rural households. Several obvious patterns become evident from the figures in Table 14. First and foremost, the proportion of income spent on heating oil and electricity is substantially greater for Native households than for both Native and non-Native households combined. In both 1974 and 1978, 33 the impact of energy costs on median household income is consistently about 175 percent larger for strictly Native households. Again, by assumption, this difference reflects differences in income rather than differences in consumption patterns between strictly Native and all- rural households. Second, the proportion of income spent on energy increases by an average annual rate of nearly 12 percent for both groups between 1974 and 1978. Whereas rural households contributed about 10 percent of their income to energy in 1974, they contribute more than 16 percent in 1978, in spite of a nominal increase in median household income that grew at 6.6 percent per year. Note again that by assumption, consump- tion of heating oil and electricity remained constant over this period. The energy budget grew faster than income essentially because energy prices increased. Third, in contrast to electricity expenditures, the level of heating oil expenditures remains constant as a proportion of total energy expen- ditures in 1974 and 1978. Thus, in summary, the proportion of income spent on energy increased between 1974 and 1978. Between 1974 and 1978, growth in energy expendi-— tures as a proportion of income occurred at about the same rate among strictly Native and all-rural households. ‘Similarly, the share of each energy component on total energy costs also remained constant from 1974 to 1978. Overall, between 1974 and 1978, the proportion of income spent on energy ranges from 10.4 to 28.6 percent depending on the definition of rural household. In order to illustrate the relative importance of energy expendi- tures in rural households, Table 15 was prepared for the Fairbanks 34 TABLE 15. THE PROPORTION OF INCOME SPENT ON ENERGY IN FAIRBANKS IN 1974 AND 1978 1974 1978 Median Expenditures Heating Fuel 699° 905° Electricity 620° 635° Total 1,319 1,540 Median é a Household Income 21,500 27,018 Proportion of Income Spent on Energy 6.12% 5.7% AHeating fuel expenditures assume the typical Fairbanks household's (Appendix A) consumption of 125 gallons per month and fuel oil prices from the Community Information Center, Special Report No. 7. biser, Electric Power, 1980 Fairbanks Municipal Utility System and the Golden Valley Electrical Association. “IsER, 1978. 4, tween 1976 and 1978, nominal per capita income decreased by 6 percent per year. This declining rate was applied to median house- hold income in 1976, $30,375 (ISER, 1978) to give $27,018 for 1978. 35 Municipality. Despite the fact that median household income decreased from 1976 to 1978, the proportion of income spent on energy declined modestly between 1974 and 1978. Over the entire interval, nominal household income grew at 5.9 percent per year, almost twice the rate of growth of nominal energy expenditures at 3.9 percent. Note, however, that household expenditures for electricity grew modestly from $620 to $635. This modest increase occurred despite a 4 percent increase in average residential electricity charges. As discussed above (Table 10), electricity consumption in Fairbanks fell 14 percent from 965 to 844 KWH per customer between 1974 and 1978. Two interesting observations emerge from a comparison of the rural energy budget as a porportion of income to that of Fairbanks. First, and most evident, is the substantially larger impact of energy spend- ing relative to income in rural Alaska. The relative impact of energy expenditures on income in rural areas is anywhere from two-to-five times larger than in Fairbanks. Second, in contrast to rural areas, the impact of energy expenditures on income actually declined from 1974 to 1978. An explanation for this is probably linked to the conservation in electricity consumption cited above. Regardless of whether the Fairbanks household energy impact increased or decreased, the dramatic increases in rural areas-—-again, almost 12 percent per year--are a result of several important factors, which are listed as follows: e small community size, e rising transport surcharges spurred by rising energy prices, e substandard housing quality, e inadequate or inefficient storage facilities. 36 PART TWO: PROJECTION TO 1988 In this section, we will project the impact of household expendi- tures for heating oil and electricity on income in rural Alaska in 1988. Several assumptions are critical to the projected impact of household energy expenditures on income. They are as follows: (1) The rate of growth in the consumer price of heating oil and electricity, (2) patterns of household consumption of heating oil and electricity in rural Alaska, and (3) the rate of growth of income. Prices The growth in consumer prices of heating oil and electricity from 1978 to 1988 will depend critically on the future path of world petroleum prices, on the impact of decontrol of U.S. domestic crude oil production, and on the growth in transportation and distribution costs throughout rural Alaska. As shown in Figure 3, the nominal world price of petroleum increased from $10 to $14 per barrel between 1974 and 1978. This implies a 9 per- cent annual average rate of growth. In 1979, OPEC abruptly doubled crude oil prices to roughly $30 per barrel. Despite these strong increasing trends, the current OPEC price of $32 may represent a ceiling on the real world price of petroleum over the next several years. Ha ! On the one hand, some observers suggest that the OPEC cartel may develop a long-run, unified pricing strategy that ties OPEC prices to world economic conditions such as the average rate of inflation in western cotutries.° On the other hand, the current Mid-East conflicts could further reduce solidarity among OPEC nations and result in world petroleum prices being determined by competitive forces. In either 37 FIGURE 3. THE IMPACT OF DECONTROL ON DOMESTIC CRUDE PRICES World Price B $/ of Crude Oil ag 30 OPEC $32/B, 1980 Ss U.S. Domestic Price of Crude Oil 15 10 1978 1980 October 1981 38 case, pending unforeseen cutbacks in world petroleum production, both possibilities suggest a leveling and possible reduction in the real world price of crude oil. In view of these possibilities, we believe it is reasonable to assume that for the next ten years, world petroleum prices will rise in tandum with the overall rate of U.S. inflation. Two important factors characterize the present market for crude oil in the United States. First, inventories have climbed to record levels partly in response to uncertainty in foreign supplies and partly in response to a decline in domestic demand for heating oil, gasoline, and other petroleum products. Second, the phasing out of price controls on domestic crude oil pro- duction is expected to be completed by October 1981. As a result, the quantity of U.S. domestic crude that is becoming available at free market prices is expanding at a rate of 4.6 percent per month (Alaska Department of Revenue, September 1980.) Although the effect of decontrol may be expected ultimately to raise consumer prices for petroleum products, there are several factors that suggest decontrol will not raise petroleum prices to the consumer any more than consumer prices would otherwise increase. The most important factor in the analysis of decontrol is the effect of controls on the refining sector. Since 1973, when controls were implemented, the refining sector has increased from 50 to 400 resellers in response to excess profits created by the rigid controls themselves. Excess refining capacity, coupled with declining domestic demand, has now reduced the refiners' profit margin to very low and sometimes zero levels. In order to minimize losses (i.e., at least recover fixed costs), refiners must prevent further declines in their production. To do this, they may be forced to absorb the extra, decontrol- induced price increases instead of passing them on to the consumer. 39 Note that although refiner acquisition costs have steadily increased due to implementation of decontrol, consumer prices of petroleum products have not. Should supplies remain plentiful, it is probable that decontrol will not increase consumer prices of petroleum products. At the present time, we believe that the closing gap between world crude and domestic crude prices, shown in Figure 3, is not likely to strongly affect U.S. consumer prices for petroleum productions, including heating oil and diesel fuel prices in Alaska. The remaining principal factor which could influence heating oil prices in rural Alaska is the rising cost of transporting and distribut- ing heating oil. While crude oil prices on the world market increased at an average annual rate of 9 percent between 1974 and 1978, heating oil prices in rural Alaska grew at about 11 percent per year over the same period.?? It is probable that this 2-percentage-point difference repre— sents ongoing increases in the cost of bringing heating oil into rural areas. If these transportation cost increases continue, as we expect they will, then despite our assumptions of constant real growth in world crude oil prices and decontrol neutrality, the real price of heating oil in rural Alaska will continue to increase at least 2 percent per year over the foreseeable future. 2+ As shown in Figure 4, the price of fuel oil would equal $1.78 in 1988 based on the assumption of 2 percent real growth after 1980. We also assume that electricity prices grow at an average annual rate of 4 percent, the historic rate for Fairbanks between 1974 and 1978. The price per KWH in rural Alaska would rise from an average of 17.4¢ to 26.2¢, assuming 4 percent annual average growth from 1978 to 1988 (Figure 5). All figures are expressed in 1978 dollars. Consumption Assumptions regarding patterns of household heating oil and electricity consumption in 1978 are conveniently made in context of what economists 40 FIGURE 4. AVERAGE CONSUMER PRICE PER GALLON OF HEATING OIL FROM 1978 TO 1988 $/gallon (1978 dollars) 300 ‘200 $1.78 2 percent annual avg. growth $1.52 Constant real price 100 $.82 Constant nominal price at an 8 percent rate of inflation 1978 1980 1988 FIGURE 5. AVERAGE CONSUMER PRICE PER KWH OF ELECTRICITY FROM 1978 TO 1988 (1978 dollars) ¢/KWH 30 26.2¢ 4 percent annual avg. growth? 20 10 8.1¢ Constant nominal price at an 8 percent rate of inflation 1978 1980 1988 *corresponds to 2 percent average annual growth and to constant real growth in full prices. 41 call price and income elasticities of demand. Price and income elas- ticities of demand describe how responsive consumer behavior is to changes in the commodity's price or to the consumer's income, respec- tively. For example, if the price elasticity of heating oil for a given household is greater than one, then the household is considered somewhat price-responsive. In this case, a 10 percent price increase will be more than offset by a greater-than-10-percent reduction in the quantity of heating oil consumed. As a result, the total amount spent under the higher-price and lower-consumption pattern would be less than what it was before the price increase. Commodities that are considered neces- sities typically have low-price elasticities, indicating that it is difficult for a consumer to find substitutes or otherwise change con- sumption patterns when the price changes. As another example, suppose a household has an income elasticity of electricity that is equal to one. Here, a 10 percent rise in income would be met by a 10 percent rise in the quantity of electricity con- sumed, whatever the price of electricity might be at the time. Occasionally, economists are able to measure price and income elas- ticities for specific commodities and specific groups of consumers based on the history of prices and quantities consumed at those prices. Under the present circumstances, this is not possible. In order to forecast household energy consumption patterns, however, we have developed a set of reasonable assumptions regarding the price and income elasticities of heating oil and electricity. These are shown in Table 16. TABLE 16. PRICE AND INCOME ELASTICITIES FOR HEATING OIL AND ELECTRICITY Elasticity Income Price Heating Oil 5 0 Electricity 1 0 42 The zero price elasticities imply that no matter how much the price of heating oil or electricity increases or decreases, household consump- tion of those commodities will remain the same. These price elasticities represent an extreme case for which one might associate a necessity. In reality, there is probably some degree of responsiveness in household electricity consumption to price changes. Note that a zero price elas-— ticity of heating oil, combined with the assumption that the real price of oil remains constant, is equivalent to the case of a unitary price elasticity combined with real increases in the price of heating oil. Again, in each case, if real income does not change, then the total household expenditure on heating oil would remain the same. In the latter case, the increase in price would be met by a compensating decrease in the quantity consumed such that total amount spent is unchanged. ‘ The household income elasticity for heating oil suggests that if household income increases by 10 percent, then the quantity of heating oil consumption would increase 5 percent. A 10 percent increase in income would be matched by a 10 percent increase in electricity consumption. Income Historical trends in nominal per capita income growth and in the rising cost of living suggest that, in general, real household income did not increase between 1974 and 1978 in rural Alaska. The most reason- able forecasting approach would be to assume that projected real income will remain constant at the 1978 nominal level. This would simplify the analysis to the extent that we would not have to introduce explicit assumptions about how fast prices and the cost of living increase in rural Alaska. Because real household income does not change, however, the positive household income elasticities for electricity and heating oil would be neutralized. 43 Results Armed with assumptions on the growth of heating oil and electricity prices, the growth of household income, and household price and income elasticities of demand, we projected the proportion of household income spent on heating oil and electricity in rural Alaska in 1988. These projections are shown for Native and all-rural households in Table 17 and displayed graphically in Figure 6. The results suggest that the historic trend of increasing household energy expenditures relative to income would continue into the late 1980s under the specific assumptions used. Between 1978 and 1988, the proportion of household income spent on energy increases by one-and-one-half times the 1978 level for both Native and all-rural households. Consistently lower Native household income compared with median income in all-rural households requires that Natives spend a larger proportion of household income on energy than do all-rural inhabitants, provided energy expenditure patterns are roughly the same between each group. Because household income remains constant in real terms over the projection period, the rising household energy costs do not result from income-induced consumption increases. By assumption, the amount of heat- ing oil and electricity consumed does not change. Real price increases are, therefore, responsible for changes in the energy budget-to-income ratios. The rapid growth in heating oil prices between 1978 and 1980 is based on actual trends in Fairbanks and represents the largest single contribution to rising energy costs. It is possible that events in the world petroleum market which strengthen competition among petroleum producers, combined with greater competition among carriers serving rural Alaska, could stabilize the real cost of heating oil and electricity in rural areas. This more favorable scenario is depicted in Figures 4 and 5 in connection with constant real heating oil and electricity prices, respectively. If we assume that, as before, real household income is also constant between 1978 and 1988, 44 TABLE 17. THE PROPORTION OF NATIVE AND RURAL HOUSEHOLD INCOME SPENT ON HEATING OIL AND ELECTRICITY IN 1978 AND 1988 (1978 dollars) 1978" 1988 Median Household Expenditures Heating oil 1,534 2,314 Electricity 465 688 Total 1,999 3,002 Median Household Income Native 6,953 6,953 All Rural 12,191 12,191 Proportion of Income Spent on Heating Oil and Electricity (percent) Native 28.8 43.2 All Rural 16.4 24.6 "From Table 14 45 Oe hee a5 Gs FIGURE 6. MEDIAN HOUSEHOLD INCOME, HEATING OIL, AND ELECTRICITY PRICES IN 1978 AND 1988 (1978 dollars) $12,191 12,000 - All-Rural Households 10,000 8,000 $6,953 Native Households 6,000 4,000 $2,314 2,000 Heating Oil Electricity 1978 1980 1988 46 then household energy expenditures as a proportion of income fall to 38.3 percent for Native households and 21.9 percent for all-rural house- holds. These lower energy budgets are still substantially above our estimates for 1974 and 1978. If under somewhat extreme conditions we assume that the nominal level of world petroleum prices in 1980 is maintained through 1988 and that overall inflation increases at an average rate of 8 percent per year, then the proportion of constant real household income spent on energy falls to 20.9 and 11.9 for Native and all-rural households, respectively. This represents a clear improvement over the 1978 energy budget-to-household income ratios and nearly matches the lower levels of income spent on energy in 1974 (see Table 14). As discussed in Part I, median household incomes in rural Alaska have varied widely in the recent past. In many cases, income growth occurred as direct response to large projects’ development in the proximity of a rural community. Whatever the cause, it is instructive to examine the impact of changing household income on the proportion that would be spent on energy. As a variation to the original case in which real household income was constant and real energy prices grew modestly, suppose that real household income grows at an average annual rate of 2 percent over the entire projection period. At 40.1 percent for Native households and 22.8 percent for all-rural households, the proportion of income spent on energy would be slightly less than the original constant real income case. Under the income-elasticity assumptions for heating oil and elec- tricity given above, household heating oil consumption would increase from 1,300 to 1,436 gallons per year, and electricity would increase from about 2,600 to 3,200 KWHs. These increases in median household energy consumption would occur in response to increases in real house- hold income. The positive income elasticity assumptions raise the 47 proportion of household income spent on energy from what it would have been. if energy consumption did not respond to changes in real income. Thus, compared to the case of constant growth in real household income, 2 percent average annual real income growth would more than offset the higher cost of increased energy consumption. As discussed above, many rural communities experienced a decline in median, real household income between 1974 and 1978. In contrast to the preceding case of rising income, the income elasticities assumptions imply that energy consumption and expenditures would fall in response to decline in real household income. If, as before, we assume that the price of heating oil increases at an average annual rate of 2 percent and the price of electricity increases at a rate of 4 percent per year, then a 2 percent average annual fall in real household income from 1978 to 1988 would raise energy expenditures as a proportion of income to 46.6 percent for Native households and 26.6 percent for all-rural households. Clearly, the income-induced decline in household energy consumption would not be sufficient to offset the decline in real household income. Median house- hold heating oil consumption would fall from 1,300 to 1,280 gallons and electricity consumption would fall from 2,600 to about 2,150 KWHs per year. Table 18 summarizes the effects of changing assumptions on the growth in household income and in fuel prices on the projected energy budget-to-income ratios for 1988. In this analysis, household consumption patterns, by definition, do not respond to price changes. Thus, there is no price-induced response in household energy demand. Rising heating oil prices do not encourage households to substitute out of heating oil into alternative fuels. This seemingly extreme assumption may, in fact, be highly realistic for cases such as rural Alaska where few alternatives presently exist. 48 TABLE 18. THE PROPORTION OF NATIVE (N) AND RURAL (R) HOUSEHOLD INCOME SPENT ON HEATING OIL AND ELECTRICITY IN 1988 (percent) Assumptions on Growth in Household Income 2 Percent 2 Percent Real Growth Real Decline Constant Real Per Year Per Year Assumptions on Growth in World Petroleum Prices 2 Percent Real N 43.2 40.1 46.6 Growth per Year R 24.6 22.8 26.6 Constant Real N 38.3 R 29.1 Constant Nominal N 20.9 R 11.9 *Using 1980 price as a base. We applied identical constant-real income and moderately-—increasing petroleum-price growth assumptions that were used for rural households to project energy expenditures as a proportion of median household income in Fairbanks. The same income and price elasticity assumptions were also used. As shown in Table 19, the proportion of household income spent on energy in Fairbanks would increase from 57 percent in 1978 to 85 percent in 1988, reversing the modest downward trend experienced there between 1974 and 1978 (Table 15). 49 TABLE 19. THE PROPORTION OF FAIRBANKS HOUSEHOLD INCOME SPENT ON HEATING OIL AND ELECTRICITY IN 1978 AND 1988 (1978 dollars) 1978 1988 Median Household Expenditures Heating oil 905 1,364 Electricity 635 940 Total 1,540 2,304 Median Household 27,018 27,018 Income Proportion of Income Spent on Heating Oil 5.7 8.5 and Electricity (percent) In general, household expenditures on heating oil and electricity as a proportion of household income in Fairbanks range from two- to nearly five-times less than rural areas depending on specific circum- stances and whether one considers Native or all-rural households. Government Pro grams There are several government programs currently operating that aid primarily low-income households in covering a portion of energy costs. This report concludes with a brief discussion of three programs and the probable impact of each on the proportion of rural household income that would be spent on energy in 1988. The programs examined include both 50 federal and state fuel assistance and state weatherization. The dis- cussion of a program's impact is limited to the case of constant growth in real 1978 household income combined with 2 percent annual average growth in real 1980 fuel prices through 1988 for Native and all-rural households. Federal Fuel Assistance. The federal government's fuel assistance program offers one-time annual grants of up to $400 per household made in the form of credit to the applicant's fuel or utility vendor. In 1979, approximately 6,000 applicants received partial payment as a supplement to other income assistance they received. During the same period, an additional 4,000 applicants received full payment of $400. Under the assumption that the real value of $400 in 1980 is retained through 1988, this program would reduce the proportion Native household income spent on energy by 15 percent from 43.2 to 37.4 percent. An equivalent 15-percent decline in energy expenditures would occur from 24.6 to 21.3 percent of income in all-rural Alaska households. State Fuel Assistance. Two fuel-assistance programs are currently operating or about to be underway on the state level. The Rural Alaska Community Action Program (RurAL CAP) currently operates a grant program to cover the difference between air and surface transportation of fuel for villages needing immediate supplies. RurAL CAP also administers interest-free loans from a revolving loan fund to provide up-front cash for advance payments for bulk fuel shipments. Communities receiving a loan of this type typically repay it as they use the fuel. The revolving loan program is helpful to rural households in several ways. First, it eliminates interest payments that would be required if cash outlays for fuel were advanced by commercial institutions. Second, carriers typically do not offer credit to communities in the form of ongoing payments of interest and principle for bulk fuel purchases that occur once or twice a year. The carrier's terms are usually contracted 51 for "cash on delivery." Third, carriers do not have strong incentives to ship fuel when more convenient and profitable transport needs compete for scarce barge space and shipping schedules. The revolving loan pro- gram offers greater certainty to the carrier by improving a community's ability to pay. It, therefore, creates more stable commercial incen- tives for carriers to ship fuel oil to small rural communities. The Alaska Department of Community and Regional Affairs (DCRA) and the Department of Commerce and Economic Development (DCED) have respec tively been mandated by the recently passed Senate Bill 438 to admin- ister a grant program for bulk fuel storage facilities and a revolving loan program for bulk fuel purchases. The DCRA grant program will provide a community with up to $60,000 in funds to purchase bulk storage facilities of 10,000 gallons or more. The DCED program is similar to RurAL CAP's and is expected to ultimately displace the federal fuel assistance program described above. To calculate the probable impact of these state fuel assistance programs in 1988, we assume that two kinds of savings accrue to rural households. First, we assume that savings in 12 percent interest pay- ments that would have otherwise been paid to commercial institutions accrue from RurAL CAP's revolving loan program. These savings would amount to about $212 per household per year if the revolving loan pro- gram affects all rural households. Second, savings from reduced tariffs on bulk fuel shipments accrue to rural households following the instal- lation of sufficient bulk storage capacity. The savings would equal about $325 per household, assuming a 25¢ per gallon tariff reduction. Again, we assume that bulk storage is made available to all rural com- munities that need it. Combined savings in reduced interest and bulk tariffs would equal $537 per household in 1988. This reduces median household heating oil expenditures by about 23 percent from $2,314 to $1,777, in 1978 dollars. The impact of these fuel assistance programs 52 would reduce the proportion of income spent on energy in 1988 from 43.2 to 35.5 percent in Native households and from 24.6 to 20.2 percent in all-rural households. Weatherization. RurAL CAP also administers a program providing basic conservation improvements such as caulking, installing storm windows, and insulating. The households they service are typically in poor condition. As a result, fuel savings of at least 40 percent have been realized in the 800 homes that have been weatherized.™” agnor [wo A 40 percent reduction in fuel costs implies fuel savings of about $800 and would reduce the total household energy budget (fuel and elec- tricity) 27 percent from $3,000 to $2,200 in 1988. This would reduce the proportion of income spent on energy to 31.6 percent for Native households and to 18.0 percent for all-rural households. The weatheri-~ zation program would reduce the 1988 proportion of income spent on energy to a level that nearly matches our estimates for 1978. Further, unlike the federal and state fuel assistance programs, the weatherization program would achieve net reductions in heating oil consumption. In contrast to one-time fuel assistance payments, weatherization would lower ongoing household heating requirements and, therefore, reduce the proportion of income spent on energy in later periods as well. 53 10. NOTES For example, in recent years Barrow residents have acquired higher incomes from capital improvements projects, which have boosted median household income to levels far in excess of those elsewhere in the North Slope Borough. Barrow residents also benefit from local supplies of natural gas. As a result, patterns of household energy consumption in Barrow are higher, while the proportion of income spent on energy is below the median levels in other North Slope communities. We have excluded Barrow from the North Slope figures in Table 1 and elsewhere because of the unusually high level of household income there. Up to seven cords per household per year in some cases. (See the University of Alaska School of Agriculture and Land Resources Management and the Institute of Social and Economic Research, 1978, p. 17-1.) In 1976, the average annual cost per KWH in Ft. Yukon was 22.1¢, compared to 14.7¢ in Kotzebue (Arthur Young and Co., 1979, p. 63). The BIA-sponsored North Star freighter also provides heating oil carrier services from Seattle to several rural communities. Tarrifs from Seattle currently range from 25 to 40 cents per gallon, depend- ing on distance to the destination port. These tariffs, however, are generally higher than those of private carriers who are able to ship petroleum products in much larger quantities (John Gray, ISER). Many communities receive fuel refills twice annually; once in late spring following breakup and again in late summer prior to "ice lock." Construction Systems Management, Inc., 1979; excluding Barrow. This is the average annual rate of growth of electricity charges in Fairbanks from 1976 to 1978. See, for example, the September 1980 issue of Petroleum Production Revenue Forecast, Alaska Department of Revenue, Petroleum Revenue Division. This discussion is based on notes from a personal conversation with Arlon Tussing of the Institute of Social and Economic Research on October 28, 1980, and with Charles Logsdon of the Alaska Department of Revenue on November 3, 1980. Based on the average cost per gallon of fuel to AVEC communities from 1974 to 1978. 55 11. Note, however, that in contrast to household income, for which we use the 1978 nominal level as a base, an estimate of the average 1980 fuel oil price (expressed in 1978 dollars) is used in order to capture real increases that occurred after OPEC doubled world petroleum prices in 1979. 12. Denny Dennison, RurAL CAP. 56 APPENDIX A ESTIMATED ANNUAL FUEL REQUIREMENTS AND HEATING COSTS FOR A TYPICAL HOUSE Fairbanks* and Anchorage Comparisons April 1980 “Typical” House Specifications Type: One-story with a full heated daylight basement (60" below grade). Size: 24'x48' on the main floor (1,152 sq. fr.). Insulation: Concrete block basemeat has 2" of styro- foam insulation next to blocks plus 6" of fiber— glass. Exterior walls on main floor have 16" of fiberglass and roof has 12”, Windows: Double-pane glass. Temperature: Interior temperatures throughout the house maintained at 68°F. Average : Annual Monthly Energy Source Unit Cost/Unit x No. of Units = Fuel Cost Fuel Costs Fairbanks* Annual Mean Temperature (9 months) 14,2°F Bituminous Coal - City Ton $ 65.90 14 $ 922.60 $ 76.88 Bituminous Coal - 10 miles outside city Ton $ 85.90 14 1,202.60 100.22 Electricity - City Kwh 6.3¢ 39,474 2,484.97 207.08 Electricity — Rural 2 Kwh ee) 39,474 2,973.69 247.81 Fuel Oil - #2 Gallon 85.1¢ 1,502 1,278.20 106.52 Propane Gallon . 98.6¢ 2,097 2,067.64 172.30 Spruce Wood Cord $ 70.00 22 1,540.00 128.33 team - City 1,000 1b. $ 5.30 139 736.70 61.39 1 Meen Temperature (9 months) 28°F Electricity - City Kwh 2.6¢ 29,358 762.96 63.58 Electricity - Rural Kwh 2.9¢ 29,358 864.96 72.08 Fuel Oil - #2 Gallon | 98.5¢ 1,117 1,100.25 91.69 Natural Gas 100 cf 18.85¢ 1,431 269.74 22.48 Propane ; Gallon 84.2¢ 1,559 1,312.68 109.39 Spruce Wood Cord . $120.00 16 1,920.00 160.00 » * Does not include 5% local sales tax (3% tax on steam). SOURCE: Marilyn Forrest. 57 Cost of Living Comparison Fairbanks/Anchorage (Fairbanks: Community Information Center, 1980), p. 28. REFERENCES Agriculture Experiment Station and Institute of Social and Economic Research. Yukon-Porcupine Regional Planning Study. Fairbanks: University of Alaska, 1978. Alaska Division of Economic Enterprise. Alaska Statistical Review, June 1980. . Numbers: Basic Economic Statistics of Alaska Census Divisions. November 1979. + The Alaska Economic Information and Reporting System. Quarterly Report, July 1980. Alaska Division of Energy and Power Development. 1979 Community Energy Survey, 1979. Alaska Public Forum. NANA Survey Summary. March 1979. Alaska Village Electric Cooperative, Inc. "A Guide Book for Members," n.d. . Annual Reports and REA Form 7 on file at Alaska Public Utilities Commission. - "1975 Fuel Cost Analysis as of December 31, 1975." Arthur Young and Company. A Discussion of Considerations Pertaining to Rural Energy Policy Options. Alaska Division of Energy and Power Development, April 1979. Community Information Center. Community Information Quarterly. Fairbanks North Star Borough, March 1980. - The Energy Report, Vol. 1, No. 3. Fairbanks North Star Borough, September 1980. Construction Systems Management, Inc. Energy Conservation in the North Slope Borough. "Fuel Storage and Conservation Study." Prepared by Crews, MacInnes, and Hoffman, June 1979. Dupere and Associates, Inc. North Slope Borough: Manpower Development and Community Survey Reports, July 1974. Forrest, Marilynn. Cost of Living Comparison Fairbanks/Anchorage, Special Report No. 7. Community Information Center, Fairbanks North Star Borough, 1980. 59 Institute of Social and Economic Research. Electric Power in Alaska, 1976-1995. Anchorage: University of Alaska, August 1976. Oil and Gas Journal. "OPEC Builds Current Account Surplus," 28 April 1980. - "Price Cuts Reflect Surplus on U.S. Crude Oil Market," 4 August 1980. Robert R. Nathan Associates, Inc. The Cost of Living in Alaska and Federal Poverty Guidelines. Report prepared for RurAL CAP and Alaska Division of Community Services, September 1976. - 2(c) Report: Federal Programs and Alaska Natives. Introduction and Summary, 1975. Robert W. Retherford Associates and Arthur Young and Company. Alaska Village Electric Cooperative Cost of Service Study: Assessment of the Utility, November 1977. Rowan Group, Inc., and Advocacy Planning Associates. Rural Mortgage Market Study--NANA Region, April 1973. Rural Alaska Community Action Program. Printout of electricity costs and fuel costs in villages of Alaska, July 1980. Scott, Michael J. Alaska Interregional Cost Differentials. Anchorage: Institute of Social and Economic Research, University of Alaska, March 1977. U.S. Bureau of the Census. Census of Population: 1970 General, Social, and Economic Characteristics. Report PC(1)-C3. Alaska. - 1977 Per Capita Money Income Estimates for States, Counties, and Incorporated Places in the West Regions of the United States. Current Population Reports, Series P-25, No. 886, June 1980. 60