It’s good news in tough economic times: For the second week in a row, gasoline prices dropped in all regions across the United States.
Regular unleaded topped out at $3.63 a gallon, on average, while midgrade unleaded averaged $3.76, a drop of about 18 cents a gallon over six weeks for both fuel grades, according to the latest petroleum report from the U.S. Energy Information Administration.
But the reprieve at the pump, coming on the heels of record gas prices, won’t be extended to Americans in mainland Japan and Okinawa, who are stuck with paying $4.06 a gallon for midgrade fuel for now.
The Army and Air Force Exchange Service has a policy to mirror stateside average fuel prices.
That’s why as gas reached record highs this summer in the States, so did AAFES retail gas prices.
But regardless of what the U.S. market does, AAFES officials say, there’s a limit on how low prices here will dip.
In order to align with current U.S. gas prices, AAFES in mainland Japan and Okinawa would have to take a loss on fuel sales — something the AAFES officials say the company won’t do because of its mission to generate earnings for military Morale, Welfare and Recreation programs.
AAFES was hoping to be able to reduce pump prices Oct. 1 with the start of the new federal fiscal year, but that didn’t happen.
In Japan, AAFES buys petroleum from the Defense Energy Support Center. Amid record global oil prices, DESC in July sharply raised its resell price to government agencies from $3.13 to $4.19 a gallon.
The Defense Department announced late last month that the wholesale price won’t budge for now.
John Roth, DOD deputy comptroller, in a memorandum issued late last month, said the decision to keep fuel at $170.94 a barrel for fiscal 2009 is consistent with short-term government energy forecasts. The DESC sells oil at a fixed rate to the military to maintain budget stability.
Roth indicated the current resell price may be reviewed in November, when the "economic assumptions" for the president’s fiscal 2010 budget are released.
AAFES officials say they are disappointed.
"As we watched fuel prices decrease in the U.S. over the past several weeks, we really anticipated that our wholesale fuel price would drop in the new fiscal year and are disappointed that it didn’t," AAFES Pacific region spokesman Master Sgt. Donovan Potter said in an e-mail to Stars and Stripes.
"We sympathize with our customers who expected a price drop in (mainland) Japan and Okinawa and assure them that if the price we pay for fuel is reduced, our pump price will also be reduced."
Until its costs drop, AAFES will hold retail midgrade unleaded petroleum at $4.06 per gallon, a break-even selling price when a 12-cent distribution cost and a 25-cent per gallon subsidy are counted, AAFES officials said this week.
"As long as our AAFES wholesale cost for gas is higher than the U.S. national average, we are forced to keep the prices at the current level, which is the lowest price for which we can sell gas without losing money," Potter wrote.
No relief is expected at NEX pumps, either, where in Japan the Navy Exchange follows AAFES gas pricing.
This means that starting Saturday, gas prices for servicemembers in Japan will be the highest in the Pacific.
AAFES midgrade unleaded on Guam will dip 9 cents a gallon to $3.93. In South Korea, premium unleaded will drop 8 cents a gallon to $3.98. Unleaded gas will also drop well below $4 a gallon.
The only grade of fuel that is cheaper at AAFES pumps in Japan is diesel at $3.85 a gallon, compared to $4.05 in South Korea.
AAFES is able to lower prices in Guam and South Korea because it’s currently paying less to provide fuel in those countries.
