In a mid-March meeting, the Larsen Bay City Council moved to restrict fuel sales from the city-owned fuel farm, cutting off sales to anyone other than the village’s 90 or so year-round residents.

A letter sent to past customers apologized for the inconvenience and cited low cash reserves at the city, in part due to outstanding bills owed by fuel customers.

High fuel prices are also to blame, Larsen Bay Mayor Allen Panamaroff said Tuesday. The city cannot afford to order more diesel and gasoline for its 130,000-gallon capacity tank farm, he said, so with supplies running low sales to the general public were cut off.

“We had to change it from selling to the general public to just the local people who are staying here year-round,” Panamaroff said.

“We were going to be able to dispense gasoline to people who are gill netting too, but at this time we can’t do that,” he said. Panamaroff hopes to resolve the situation by June, when the salmon season begins to pick up.

Diesel, home heating oil and gasoline are running low at the city tank farm and the city is completely out of propane, according to the letter to customers announcing the council’s decision.

Panamaroff said a new bottle of propane has been ordered.

Another factor in the fuel shortage is diesel consumed by the city-owned electric utility. A cold winter caused a decrease in the amount of electricity generated at Larsen Bay’s hydroelectric plant.

“This causes you to burn more diesel,” Panamaroff said, adding the hydroelectric plant is currently shut down for upgrades to its generators.

Relief for the shortage, and some limited competition for fuel sales, could come at the beginning of June when the Kodiak Salmon Packers cannery fills its fuel tanks for summer.

The plant, recently purchased by Seattle-based Icicle Seafoods, will host more than 200 laborers and has its own tank farm with a capacity of about 100,000 gallons. Ron Hartman, the fish plant’s winter watchman, said much of that fuel capacity is accounted for. It will power the five diesel engines that supply the fish plant’s electricity.

“We’ve got a little fuel farm that we tend here,” Hartman said.

This will be the second year Icicle Seafoods has operated the cannery. In past years, the cannery sold fuel mainly to fishermen who delivered fish to the cannery. Hartman said he did not know what Icicle Seafood’s policy would be, but it’s normal for a cannery to stick to supplying only their purse-seine fleet and set-net fishermen.

“It kind of goes without saying that we would sell to them first,” he said.

A message was left for Icicle Seafoods management in Seattle this morning, but was not returned in time for this story.

Hartman said the plant had more than 200 employees last summer, and expects about 230 this summer.

Workers are trickling in now. Hartman said mechanics are tuning up the diesel engines, and he expects tank farm maintenance, inspections and the like to happen soon.

Panamaroff said workers at the City of Larsen Bay are doing what they can to make sure their community has a stable fuel supply to meet summertime demand.

“We are going to try the best we can to make sure that we can do that,” Panamaroff said. He said letters were sent to previous customers soon after the council’s decision was made.

“We did that so they wouldn’t have any surprises when it comes to obtaining fuel here when they get to the village,” Panamaroff said.

Although the decision to sell fuel only to Larsen Bay residents was made by the City Council, Panamaroff said a council vote would not be required to lift the ban.

“As soon as we are able to order more fuel, then we can begin selling to other customers,” he said.

Mirror writer Scott Christiansen can be reached via e-mail at schristiansen@kodiakdailymirror.com.