The price of energy varies, though the trend appears painfully directional, effectively levying an ever increasing tax on the cost of living in the SWAMC region. What causes this relentless rise in energy costs? Largely, it is globally priced oil, which removes our ability to dictate prices, and the increasing global demand on oil derivatives largely being driven by the millions (billions) of emerging economy citizens being pulled out of poverty. The short term effect of this increased demand is that the relative price paid for a unit of energy derived from oil is out of balance, and thus costs much more for a unit of energy than comparable fuels. The other primary factors of high cost energy are the structural inefficiencies of long supply chains and limited economies of scale. 

The premium paid to heat homes for oil-based fuels is easy to see when comparing the various fuel sources. Note the high cost of electric heating in the table above. This does not necessarily mean that electric is priced incorrectly, but more that heating the air with electricity is inefficient. However, using electricity to run a heat pump has cost savings potential. The Coefficient of Performance (COP) on Heat Pumps ranges from 2-4. If your COP is 3 (300% efficiency), your electric heating bill would be $114 (one-third the price), vs the $344 required to heat the air, as shown in our table. Coal is the cheapest fuel source in our table, although when accounting for the full external costs associated with using coal (ie pollution, health effects), the price likely narrows with other sources of energy. Anticipated carbon pricing schemes would raise market prices to reflect the true social costs of burning relatively dirty fuels. The next cost effective source of fuel in our analysis is natural gas, which has economists excited about gas's potential to meet current energy demand as our economy transitions towards next-generation renewable resources. Understanding the total costs of using gas over the next 30-50 years will prove difficult: Carbon taxes, Alaska gas, Asian markets, unconventional gas, capital infrastructure, short-term costs of alternative energy, and many more unknowns exist. However, gas does appear to be a promising energy source for many Alaskans, both urban and rural.