"This is not acceptable".

In a written response dated May 14, Lindsey said she was "astonished and offended" at the tone of Wrede's letter and called his accusation of price gouging "highly insulting."

In a follow-up letter a week later, Lindsey blamed the price difference between Homer and other ports on Petro Marine's use of more expensive and less-polluting Ultra Low Sulfur Diesel fuel and accused her competitors of mixing ULSD fuel with high sulfur fuel to lower costs.

"It is apparent from your letter that the City of Homer prefers the less expensive fuel," wrote Lindsey. "As a result, effective immediately, Petro Marine Services will provide the same sulfur content fuel at a competitive price, forgoing the environmental and health benefits of ULSD until it is mandatory in 2012."

As of Tuesday, Petro Marine was still using ULSD fuel at its two fuel docks, said Carol Inman, plant manager for Petro Marine at the Homer Harbor, who otherwise declined to comment for this story.

On May 22, the day after Lindsey's final letter, Petro Marine's prices for marine diesel at the Homer Harbor suddenly dropped from more than $3 per gallon to $2.59 per gallon, according to Wrede, Homer Harbormaster Bryan Hawkins and commercial fishermen who fuel their boats at the harbor.

On Tuesday, the price had dropped even further, to $2.51 per gallon, which is more in line with Alaska ports like Kodiak, whose two fuel docks, operated by Petro Marine and North Pacific Fuel, were at $2.60 and $2.55 per gallon respectively.

In Cordova, whose only marine fuel supplier is Shoreside Petroleum, prices for marine diesel were at $2.47 per gallon Tuesday.

"I'm really happy that Walt Wrede took the initiative to write the letter," said Don Lane, captain of the longliner F/V Predator. "A number of commercial fisherman have complained and asked Petro Marine directly why there is always a 40 to 50 cent difference between Homer and Kodiak. The only response they get is they say, 'You just don't understand the oil business.'"

Wrede said he intended to respond to Lindsey's May 21 letter later this week.

"What I'm going to tell her is I did not mean to offend her. Our intent was to get some answers for our fishermen and our local business owners who have been asking about it," he said.

Because Petro Marine's fuel for Homer and Kodiak is shipped on the same barge and the sales tax for the two cities is similar -- 7.5 percent for Homer and 6.5 percent for Kodiak -- Wrede said he was still confused as to the reasons for the big difference in prices.

One thing Kodiak has that Homer doesn't have is competition in the marine fuel business, but that might be about to change.

"They have leases at both docks but we've already given permission to Home Run Oil to fuel the larger boats from the Deep Water Dock and we would be open to someone else leasing space in the harbor for another fuel dock. There's been interest expressed in other companies and we're having talks about that," said Wrede.

Lindsey was unavailable for comment for this story and Smokey Norton, director of marketing for Petro Marine, declined to comment.

Aaron Selbig can be reached at aaronselbig.@homernews.com.