Iqaluit (Mar 28/05) - With oil prices hitting all-time highs of more than $56US a barrel, airlines are signalling they may soon hike fuel surcharges.

At a range of $48 to $52 per barrel it will be "status quo," said Mike Olsen, director of sales for First Air.

"If it goes much higher, we'll have to re-evaluate," he said, adding fuel costs are 30 per cent of the company's overall operations.

"That is very scary for everybody," he said.

"It may go up."

Currently the Inuit-owned airline's surcharges depend on the route. One-way fares from Resolute to Ottawa include a $45 fuel levy.

Comparably shorter routes, such as Iqaluit to Rankin Inlet or Cambridge Bay to Yellowknife, are at $30 per direction - in line with the current average First Air fuel surcharge.

"With Northern carriers, fuel is even a higher component of cost," said Olsen.

First Air certainly isn't the only airline facing higher fuel prices.

At Calm Air - which services Arviat, Baker Lake, Chesterfield Inlet, Coral Harbour, Rankin Inlet, Repulse Bay and Whale Cove - Bob Backhouse, vice-president of operations, said the travelling public will end up bearing the cost.

"That's the only way (airlines) can continually have economic viability," he said.

Calm Air's rates were not available at press time, but Backhouse said not all companies charge the same rate.

"It depends on how much fuel goes out the tail pipe," he said. "One company might not use the same amount of fuel as another."

The fuel price increases are not expected to have a similar affect on sealift charges, said George Tousijnant, vice-president of operations for Nunavut Eastern Arctic Shipping.

Costs for the 2005 sealift are fixed, based on a contract signed with the Government of Nunavut.

"Moving cargo by ship will always be more economical," he said.

"It's still a very efficient way of moving cargo between two places compared to trucks and trains - the worst is airlines, of course."

Last year the territory burned through a total of 165 million litres of fuel meeting its heating, electricity and transportation needs.

Of that, 39 million litres was used generating power, with 13 million litres of that powering Iqaluit alone.

Higher oil prices may send the cost of living in the same direction, however, it's still a question of when the jump will be felt by Nunavummiut.

Time will tell

"We don't know yet what the cost will be for purchasing in the spring and summer," said Tom Rich, deputy minister with Nunavut Community and Government and Services - which includes Nunavut's Petroleum Products Division.

"The prices are partly being driven by large demand in China and low refinery capacity in the U.S."

Because his department's contracts are current for the next year, Rich doesn't see a large impact on goods being shipped to Nunavut over the next 12 months.

"Beyond that we have to see what happens with contracts and the price on the world market," he said.

- with files from John Curran