AAFES freezes gas prices for 90 days
in Japan, Okinawa as policy is reviewed
By Jennifer H. Svan, Tokyo
bureau chief
Jennifer Svan / Stars and Stripes
Senior Airman Arren Reich, 24, of the 730th Air Mobility Squadron at Yokota Air Base,
fills his tank with AAFES gas Saturday. |
AAFES is freezing its gas prices in Japan and Okinawa at $1.76 per gallon while it
examines a new controversial pricing policy.
A 90-day moratorium on price increases goes into effect Thursday, Army Maj. Philip
Smith said from Army and Air Force Exchange Service headquarters in Dallas.
Under AAFES’ new monthly price-adjustment policy, gas prices would have increased
or dropped in June.
With the cost of fuel continuing to climb in the States, it’s likely AAFES prices
would have risen, since its overseas gas prices are now based on Department of Energy
averages from the previous month.
Smith did not know what the fuel price would have been in June without the moratorium,
saying it was prompted by the unexpected hike in gas costs.
Stations in Korea and on Guam have always operated with the 30-day review policy, and
foresee no change, according to AAFES officials.
When the pricing policy was approved in December, the spike in fuel prices "was
unforeseen by the industry, the Department of Energy and us," he said.
AAFES wants to "further examine the policy in light of this new knowledge,"
Smith said.
Prices at AAFES pumps in Japan, Okinawa and Korea jumped from $1.62 to $1.76 per gallon
May 10 to reflect the policy change. The increase took many AAFES customers by surprise,
as gas prices traditionally have been adjusted only once a year. AAFES officials said the
switch to monthly pricing was prompted by customer comments received after Oct. 1, 2000,
when the price surged from $1.20 per gallon to $1.62.
The average retail price of gasoline in the United States as of May 18 was a fraction
over $1.76 per gallon, according to the Lundberg Survey. The average wholesale price was
$1.24 per gallon.
AAFES, meanwhile, will continue to pay the U.S. government $1.13 per gallon for gas in
Japan and Okinawa until Oct. 1.
And that continues to irritate some AAFES customers here, despite the moratorium.
"I don’t think it’s fair," said Air Force Sgt. Laron Washington,
35. "They’re locked in, so why shouldn’t we be? How much money are they
going to make in that (90 days)?"
The temporary stabilization at $1.76 per gallon wasn’t much consolation for
30-year-old Josette Cook, a military spouse at Yokota.
"I think they should bring it down," she said.
For Michael Walker, 33, a civilian employee at Yokota, the moratorium is just
postponing the inevitable.
"I think in three months they’re going to boost the price again," he
said.
Saturday’s announcement by AAFES followed what Smith called "a fruitful
discussion" via telephone on the issue between Maj. Gen. C.J. Wax, AAFES commander,
and Lt. Gen. Paul Hester, U.S. Forces Japan commander.
Earlier in the week, Hester told Stripes he was "very concerned with any change
that adversely affects our families. I’m also most disappointed that no one from the
AAFES leadership in the (United States) or here in Japan contacted my office at USFJ or
5th Air Force to inform me about this dramatic new pricing policy."
Hester said at the time that he and his staff asked AAFES for more information on the
decision to implement the price increase.
An AAFES representative in Dallas explained in writing last week that the company
expects a sizeable increase in gas costs this October from its suppliers at the Defense
Energy Support Center. By basing overseas prices on the Department of Energy average,
"we are cushioning overseas customers from the impact of a single, annual adjustment
seen under the previous policy.
"Further delay would increase the risk of larger increases in the future."
While AAFES customers will pay $1.76 per gallon for at least the next three months,
prices at Navy Exchange pumps remain at $1.62.
NEX’s service operations manager at Yokosuka Naval Base, Japan, said she prices
will remain the same until the new standard price for Department of Defense fuel is set
for fiscal 2002.
NEX also pays the U.S. government about $1.13 a gallon for motor fuel.
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