From The Fairbanks Daily News-Miner, Sunday, October 24, 2010:
Gas prices aren’t cheap in Alaska. For many, expensive gas just comes with the territory of a high-cost-of-living area. For the past year, however, prices have been steadily 40-90 cents higher than the national average, according to alaskagasprices.com. As recently as mid-2009, they were almost equal. What happened?
One might think in an oil-rich state, the abundance might affect a supply-demand curve. The process to the market is not so simple.
Two oil refineries operate in the state — Tesoro Alaska and Flint Hills Resources. They both produce jet fuel, diesel and gasoline among other things, and only a portion of their crude oil supply comes from Alaska. When they look around, they don’t see many other competitors. In fact, they are considered an oligopoly in the state.
Since they have so much influence over prices, they have been accused of marking up the cost of their crude oil, which usually makes up about half the amount of gasoline prices.
In 2009, the State House of Representatives created House Bill 68 to prevent price gouging among Alaskan refineries. Fairbanks Rep. Scott Kawasaki sponsored the bill.
“I think they’re just making gross profits,” Rep. Kawasaki said about the two refineries. “They’re basically abusing consumers.”