What happens when the global diesel shortage hits remote communities?
Diesel fuel keeps transportation networks, agricultural equipment, and industrial operations around the world running. It’s also how an estimated 700 million people worldwide generate their power. And as the global diesel shortage has put the spotlight firmly on the growing vulnerability of large industry and its economic repercussions, around 400 off-grid communities across Alaska and Canada are facing compounding threats to their primary source of energy.
The wars in Iran and Ukraine have removed approximately eight percent of the world’s diesel supply, or roughly 2 million barrels per day, which has sent average U.S. diesel fuel prices skyrocketing to more than $6 per gallon over the last month. In Canada, the national average has hit $2.63 per litre. This coincides with reports in the U.S. of the lowest stock of reserve diesel since regular records began in 1982. It’s a story that has been making headlines for months now, as truckers, farmers, and everyday consumers attempt to grasp the effects that higher fuel costs will have on their lives this winter and beyond.
In off-grid communities, global fuel disruptions are amplified by diesel dependence, seasonal bulk purchasing, limited road access, and long transportation routes. Remote communities are often at the far end of complex supply chains and will likely continue to face disproportionate price increases as available supply becomes more constrained.
In May, the Assembly of First Nations warned that rural, remote, and northern First Nations were being hit especially hard because of their reliance on diesel for both heat and electricity. In September, dwindling diesel supplies in Igloolik, Nunavut, raised concerns about essential services. Meanwhile, rural Alaska’s average heating-fuel price reached a nominal record of $7.97 per gallon in August, with Western Alaska averaging roughly $9 per gallon. A mid-October Anchorage Press article reported diesel stove fuel prices of $15.45 a gallon in Kobuk. Alaska’s Yukon-Kuskokwim communities are preparing to increase their heating fuel budget by as much as 80 percent over the next year.
If the problem is both energy cost and availability, what is the solution?
A recent Energy Resilience Roundtable for U.S. territories, Alaska and Hawaii in Anchorage highlighted community interest in exploring emerging technologies, including wave and tidal energy. Through ORPC’s partnerships in remote Alaska and Canada, we understand the desire by many Indigenous communities to achieve energy independence and how they have prioritized the search for cleaner, more affordable and local sources of power. Many naturally turn to the resource on their doorstep.
Instead of relying on fuel shipped thousands of miles by tanker, barge, truck, or aircraft, hydrokinetic power generates electricity from rivers or tidal currents adjacent to its users. It’s an energy source that is predictable, and insulated from international conflicts, refinery outages, and global fuel market volatility.
With the U.S. federal investment tax credits available and similar incentive programs emerging in Canada, hydrokinetic projects can already provide significant reductions in electricity costs while improving long-term energy security. Based on a study by ORPC, a diesel fuel cost of $6 per gallon equates to an estimated $0.98 per kilowatt hour in some remote Alaskan communities. A RivGen Power System can reduce electricity prices for these communities by as much as 50% and provide a path to ownership for these communities if desired.
The diesel market challenges facing the world today are forecasted to take years to resolve. In the meantime, communities that depend on fuel imported from distant markets remain vulnerable to forces beyond their control.
River and tidal power could offer a solution.