Kennie, a blogger (Tales from the Arctic) and a teacher in Arctic Bay on Baffin Island, went through the grocery store and photographed product prices to prove something to her incredulous friends down south: Believe me now? $37.89 for six cans of Minute Maid juice?
The post provides 19 more price exhibits.
The economists at the University of Alaska Anchorage's (UAA) Institute for Social and Economic Research have recently looked at the high prices for fuel in remote Alaskan communities: Dollars of Difference: What Affects Fuel Prices Around Alaska?
The study by the UAA economists suggests several reasons for high fuel costs (and I assume much of this applies to other goods):
- transportation costs - there are no roads, in some places fuel even has to be brought in by air;
- these remote and rural communities are often very small limiting potential for economies of scale;
- the communities are served by small numbers of transportation, wholesale and retail firms, so there might be some exercise of market power;
- rural transportation or storage infrastructure may be limited or in poor condition;
- the need to load and unload items several times as they move through the limited transportation infrastructure and between transport modes;
- short ice-free season increases transport and storage costs.