Svalbard: Increased oil prices impact Longyearbyen

Higher diesel prices linked to the war in Iran and wider unrest in the Middle East are reaching Longyearbyen, according to High North News. Heat and power on Svalbard come from diesel. The archipelago is therefore exposed to the global fuel market.

The town moved away from coal in 2023 and now relies on a temporary diesel-based energy supply. Svalbard Energi runs it, with a thermal power plant and boilers that produce both electricity and heat. Millions of litres pass through the plant's tanks. The company buys diesel worth more than NOK 100 million each year.

Torstien Sole-Gärtner, who leads Svalbard Energi as its general manager, told High North News that the company pays open-market prices, so a rise hits it directly. He said prices are currently swinging a lot from one day to the next. He said the effect depends mostly on whether the high level lasts. The company earns money by selling power to customers and from state subsidies. Asked about customer prices, he said no changes are being considered in the short term. If high prices continue, revenue from customers, from subsidies, or from both would have to go up.

Brent Spot oil has risen 29% over the past month, High North News reported. On Wednesday 11 March it stood at about 90 dollars a barrel, after passing 100 dollars earlier the same week. Fuel at the pump has also gone up. In several places in Norway it costs more than NOK 25 per litre.

Lennarth Kvernmo, head of business development at Longyearbyen lokalstyre (the local council), said many local sectors depend on energy and are sensitive to oil prices: hotels, restaurants and other catering, production kitchens, transport and logistics. He listed possible results as costlier freight, higher prices for groceries and consumer goods, and bigger costs for boat trips, tourist transport and research equipment. He also said higher oil prices might slow investment and reduce the town's appeal. He added that no impact analysis has been done on how rising oil prices would affect business in Longyearbyen.