Dillingham, Alaska — population around 2,000, reachable by plane or barge — has three gas stations, and all three charge about $9 a gallon. For comparison, the national average peaked at $4.56 in May and has since eased to about $3.80. Up the river in New Stuyahok, the local distributor sells fuel at $10. When the national number fell, Dillingham’s didn’t. Averages are what economists live in; retirees live in their own zip code.
The Journal introduced us to two people every advisor should think about. A 67-year-old retiree who paid $1,000 a month to heat her house last winter — against a Social Security check of $1,483 a month — and is now weighing going back to part-time work. And an 84-year-old who paid $600 a month for heat and is finally firing up the wood stove he bought eight years ago. Even the town government is bracing: Dillingham budgeted an extra $166,015 in fiscal 2027 just for heat and vehicle fuel.
Here’s the twist: Alaska’s oil business is booming while Dillingham freezes at $9. The Pikka project — Repsol and Santos — starts flowing 80,000 barrels a day later this year. ConocoPhillips’ roughly $9 billion Willow project starts in 2029 at up to 180,000 barrels a day. March’s federal lease auction in the National Petroleum Reserve drew a record $164 million from ConocoPhillips, Repsol, Shell, and Exxon. S&P Global says Alaska’s output could more than double to a million barrels a day, and the state expects $2.5 billion in petroleum revenue in 2035. Eligible Alaskans even collected a $1,000 sovereign-wealth dividend in 2025. Oil wealth in the ground, $10 diesel in the tank — because pipelines and profits don’t deliver to a town without a road. (For what it’s worth, WTI crude closed Monday at $68.55 — a perfectly ordinary price, nationally.)
Strip away the parka and this is the exact anatomy of the risk we write about constantly: a fixed check meeting a spiking, non-negotiable expense. She cannot skip heating an Alaskan winter the way you might skip a vacation. So the deficit has to come from somewhere — going back to work at 67, burning wood at 84, or, for a retiree with a portfolio, selling investments at whatever price the market happens to offer that month. That last one is sequence-of-returns risk in its purest form: it’s not the average return that kills a retirement, it’s being forced to sell at the wrong moment because an expense wouldn’t wait.
Budget your basket, not the CPI. Write down your five non-negotiable expenses — housing, heat and power, food, medicine, insurance — and price-shock each one by 50%. That’s your personal stress test. Keep a cash sleeve. One to two years of essential spending in short Treasurys still paying north of 4% means a price spike is paid from cash, not from stocks sold in a downturn. Own an energy hedge. If energy prices are your enemy at the pump, let them be your friend in the portfolio — our energy-and-defense sleeve exists precisely so that the thing inflating your bills is also paying you dividends. Mind the fixed check. A Social Security COLA lags a local price spike by a year or more; claiming strategy is partly about making that fixed check as large as possible before you need it to fight alone.
You don’t need a bush plane to meet this risk. A CalSTRS retiree with a fixed pension option faces the same arithmetic when her utility bill doubles, her insurance premium jumps 40%, or gasoline in her county runs two dollars above the national average — which, in parts of California, it reliably does. The pension is the $1,483 check in this story; the question is what stands between a personal price spike and a forced sale of investments. The households that sail through are never the ones that predicted the spike. They’re the ones whose plan didn’t require predicting it.
First, run your own Dillingham test: list the expenses you cannot skip and ask what happens if the worst one jumps 50% for two winters. Second, check your cash sleeve — if a $6,000 surprise would force you to sell stocks, the sleeve is too thin, and 4%-plus short Treasurys mean you’re finally paid to fix that. Third, look at whether your portfolio owns any of the energy complex that your household is short by default. Fourth, if your retirement runs on a fixed check — pension or Social Security — make the claiming and election decisions with a price spike in mind, not just an average year. Inflation is personal. Plan for yours.