AAFES admits summer gas pricing error

From May 5 through July 6, 2007, the Army and Air Force Exchange Service overcharged as much as 3.74 cents per gallon of fuel for all grades of gasoline and diesel.

The overcharge was caused by a rounding error in an automated pricing system, Lt. Col. David Konop, an exchange spokesman, said.

Stars and Stripes discovered the problem when analyzing old pricing data, prompted by a reader’s inquiry on a related issue. A reporter brought the overcharges to the exchange’s attention at the end of January.

“This is simply a process error that we appreciate being brought to our attention so we could fix it,” Konop wrote in an e-mail response.

To make up for the overcharge, fuel will be marked down a penny a gallon starting on Saturday, according to a statement from Konop. The statement did not explain how AAFES arrived at that price cut.

The markdown will continue “until the average since May matches” the U.S. average plus local dispensing costs, Konop wrote.

AAFES overcharged by different amounts in different countries for different grades of fuel. For example, from June 30 through July 6, prices for super unleaded were inflated 3.7 cents per gallon in Germany, 2.3 cents in the U.K. and 2.5 cents in the Netherlands.

The exchange fixed the discrepancy in July, according to Konop. The exchange was aware the prices were averaging out higher than they should have before July, however.

Without knowing how many gallons of each grade of fuel were sold in each location, it’s impossible to know what the overcharges add up to. AAFES did not provide that answer as of press time.

According to calculations based on AAFES’ previous fuel sales, the total amount is likely somewhere between $100,000 and $160,000. In 2005, AAFES sold roughly 817,000 gallons of fuel per week in Europe. That year, an overcharge of 3 cents per gallon would have resulted in a cumulative overcharge of about $24,510 a week.

Since the pricing process was fixed, the exchange’s prices — on average — have matched its longstanding price formula, which adds local dispensing costs to the average U.S. price. But because of a rounding error in the process, the exchange’s fuel prices can differ from that formula by as much as 1.89 cents per gallon on any given week.