Biggest One-Week Oil Price Rise in Two Years Hits Consumers

Feb. 25, 2011— -- As oil touched $100 a barrel this week for the first time since 2008, residents of Alaska, the state with the most expensive gas in the country – sometimes triple the country's average - say daily life is being affected in ways large and small.

According to the AAA Daily Fuel Gauge, Alaska has the highest average price of gas per gallon at $3.66 as of Feb. 24. The state with the least expensive gas is Wyoming, at $2.98 a gallon.

The price of oil settled at $98.13 on Friday, an astonishing jump of 14 percent or $11.93 from the previous week. This was the biggest one-week percentage increase in the price of oil in two years.

Verne Rupright, mayor of Wasilla in southern Alaska, said residents are especially price-sensitive to the commodity in the largest state in the country.

"It's going to affect everything," said Rupright. "We're definitely watching global oil prices."

The price of oil may have eased after news that Saudi Arabia announced a $36 billion economic package, allaying fears that unrest would spread further in the Middle East. Many are concerned that Libya could halt exports after leader Col. Moammar Gadhafi threatened to destroy his country's oil fields.

This week, the U.S. average price of gas per gallon rose to $3.19, up 54 cents from a year ago, and slightly higher than last week's $3.14. This was the highest weekly price posted during the month of February since 1990, according to available data.

Rupright said gas in his neighborhood currently averages around $3.70. But in more rural areas like Kotzebue, in the northwest region, gas is around $7 a gallon. Rupright said he fears that with the growing price of oil, gas prices could skyrocket as they did in 2008. Three years ago in Kotzebue, he said, gas passed $12 a gallon.

Cold, Long Alaskan Winters

The majority of Alaska residents are alert to energy trading, perhaps more than the rest of the country, for a number of reasons, according to Kreher.

First, gas prices affect heating bills during Alaska's notoriously cold and long winters.

"When it's 40 below your house gets cold really quickly. Even in the south central Wasilla area, yesterday it was 14 below when I got to my house," Rupright said.

The state's heating assistance program helps with the costs of home heating for low-income families.

"Some of Alaska's most vulnerable families often have to make tough choices between home heating costs and basic needs," said Ron Kreher, director of the Division of Public Assistance in the state's Department of Health and Social Services.

"Heating assistance programs are important regardless of where you are in the U.S.," he said. "In Alaska it's a significant need because of the remoteness of villages, prolonged winters and very high costs of keeping your house warm and subzero temperatures."

Kreher said 19,252 households participated in Alaska's heating assistance programs in 2010.

The geography of the state - which includes mountains, islands and tundra - means high shipping and travel costs.

"As far as fuel goes for vehicles, while many Alaskan communities have no roads people still rely on snowmobiles and boats and do things that Alaskans do every day," said Kreher. "In rural Alaska, both heating fuel and gasoline can be triple and double in other places."

Kreher said rural cities like Anaktuvuk Pass can have gas prices that average around $9 because fuel must be flown in by airplane.

Rupright said Alaskans are intensely attuned to the price of oil because of the simple fact that they live in an oil-producing state.

"We have no state income tax," said Rupright, explaining that the state is dependent on revenue related to oil exploration and production. "When the price of oil goes down, there's less money in state coffers."

That makes the price of oil a double-edged sword for Alaskans.

"When price of oil goes up, state revenue goes up but the cost of living increases too. Everyone talks about it. We wonder why we're not doing more exploration here."

Balancing Act: Heat or Food

Sandy McClintock, director of communications for the United Way of Anchorage, said additional costs from gas and energy prices could adversely affect residents barely surviving as is. Last year, callers to Alaska's health and services phone number, 211, increased by 50 percent, according to McClintock. She said many of those calls were from first time callers seeking assistance for basic needs such as rent assistance and food.

"We know there are families that make tough choices," McClintock said. "It can be either food on table, gas for work, rent or mortgage, or paying the utility bill. It's a tough balancing act."

ABC News' Zunaira Zaki contributed to this report