Karen Mackenzie
Northern News Services
Published Monday, June 02, 2008

NUNAVUT - The Government of Nunavut is bracing for a major spike in fuel costs as world oil prices soar to almost double what they were last fall.

Finance Minister Louis Tapardjuk told the legislative assembly last week that the cost to the territory could increase by as much as $85 million.

That would mean a 60 per cent increase over last year's total fuel purchase of $137 million.

"Prices in fuel oil are forever escalating and there seems to be no ending in sight," said Community and Government Services Minister Levinia Brown in the legislative assembly May 23.

Last November, the Government of Nunavut instituted an increase of 10 cents per litre on gasoline and 20 cents per litre on aviation fuels in response to the rising cost of world oil prices.

The cost of oil rose to nearly $135 US a barrel last week.

The latest blow will be felt immediately, as the GN prepares to purchase its summer re-supply.

When asked how the government would handle the latest hike, Energy Minister Ed Picco said the cost could be offset by federal subsidies.

"We have to engage our federal partners and say 'look, maybe we need some extra help,'" said Picco, who briefed members of the legislative assembly on the issue in a private meeting last Wednesday.

He also cautioned that prices could fluctuate either way.

"It's all speculation," he said. "When you see the increase it's not just in the price, it might be the volume."

According to Picco, the long-term solution probably lies in alternative forms of energy.

"At the end of the day, we have a serious addiction to oil and we have to get off it," he said, pointing to the potential for wind and hydro energy.

Last week, he also met with a member of the Canadian Nuclear Society who is personally developing small nuclear reactors for potential use in the North, he said.

The GN also approved a hedging policy last year, aimed at offsetting the rising costs.

But while it hired financial company Merryll Lynch to put together the private investment fund, the GN did not implement it in time for this year's fuel purchase.

Iqaluit Centre MLA Hunter Tootoo blasted Tapardjuk at the legislative assembly on the topic last Thursday.

"It's a little too late now. As the minister said, we're going to get hit with a $70- to $85 million increase," he said.