Alaska lawmakers heard stark warnings Wednesday about fuel supply challenges facing rural communities, with officials describing potential shortages and price increases that could reach catastrophic levels.

The House Energy Special Committee convened fuel suppliers, utility operators, and state officials to assess the crisis. Testimony painted a picture of communities already paying up to $17 per gallon for diesel fuel, with prices expected to climb 30 to 50 percent higher this year.

The fuel crisis stems from the U.S.-Iran conflict that began in late February, which has driven gasoline prices nationwide sharply higher. Voluntary export controls in Japan and South Korea have introduced significant uncertainty into fuel availability for Western Alaska, cutting off traditional supply sources from South Korean refineries.

Nils Andreassen, executive director of the Alaska Municipal League, told lawmakers the state faces both a price problem and an availability problem. The difference matters because higher costs strain budgets while fuel shortages threaten basic services.

"The larger issue is whether fuel will be available at all," Andreassen said.

Mike Poston, director of sales at Vitus Energy, explained that traditional fuel sources from South Korean refineries have been cut off due to Middle East supply disruptions. Those countries are implementing rations or prohibiting or limiting exports, making the most economical supply of product no longer available. His company now must source fuel from farther away, increasing both transportation costs and delivery times.

Vitus typically begins taking village fuel orders in January and contracts with refineries by February. This year, the company has bid unsuccessfully on some fuel supplies. Poston said the company believes it will have to continue bidding higher until successful. The heavy supply push will come probably sometime in June or late June or early July. That compressed timeline leaves little margin for weather delays or other disruptions.

Poston warned that communities without funds available when fuel arrives may not receive deliveries. At current fuel values, Vitus cannot extend credit.

"We can't be the bank," he said.

If more than a couple of villages need fuel flown in, Poston said, the infrastructure to do that does not exist in Alaska. He noted that Noatak, not far from Kotzebue but with a river that is not navigable, must fly in fuel at a current price of $17 per gallon.

Dr. Gwen Holdmann, chief scientist at the Alaska Center for Energy and Power, presented analysis showing rural Alaska consumes roughly 90 to 100 million gallons of liquid fuel annually. A five-dollar-per-gallon increase would add $450 million in costs across the state. Even a one-dollar increase translates to $100 million.