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While AAFES gasoline prices in mainland Japan and Okinawa have held at $2.304 a gallon for midgrade fuel, they’re taking a nose dive in South Korea and Guam.

But if the Army and Air Force Exchange Service maintains market-based prices overseas that mirror stateside trends — a policy that’s currently under review — that downturn may be short-lived since U.S. retail fuel prices are again on the rise.

Motorists in South Korea and Guam this month are paying 16 cents less per gallon at the pumps than they did in December because of lower December retail prices in the States. Regular unleaded costs $2.236 a gallon in South Korea; on Guam, it’s $2.269. In November, AAFES charged $2.665 a gallon in South Korea for regular unleaded and $2.699 in Guam.

To determine monthly fuel prices at its overseas gas stations, AAFES starts with either the previous four- or five-week average in the States, as reported by the Department of Energy. To that figure is added local incremental dispensing costs — expenses to provide fuel in an overseas location that can include cost of labor, depreciation of equipment and changes in the exchange rate, for example.

Phil Garcia, Navy Exchange spokesman, said officials there set gas prices monthly. Exact rates for the overseas pumps were not available at press time.

But Garcia said NEX now follows a market-based pricing system similar to AAFES’ procedures, in order to be competitive with AAFES prices.

For January overseas prices, AAFES used the four-week average between Nov. 28 and Dec. 19, company officials said. For regular unleaded, that average was $2.174 a gallon — down from $2.338 the previous month. Local incremental dispensing costs for January were about six cents a gallon in South Korea and about nine cents a gallon on Guam, according to AAFES officials.

The previous four-week Department of Energy average for midgrade fuel — the only type available in mainland Japan and Okinawa besides diesel — also declined, from $2.446 to $2.273 a gallon. But AAFES is keeping the December retail price of $2.304 a gallon because its overseas gas pricing policy includes a provision that pump prices not fall below the “floor price,” said Army Sgt. 1st Class Amanda Glenn, AAFES spokeswoman on Okinawa, in a written response. Floor price, she states, is defined as the product cost plus the country-specific dispensing cost.

In January, five areas — Netherlands, Turkey, Azores, Japan and Okinawa — were affected by floor prices, Glenn wrote. In mainland Japan and Okinawa, AAFES pays $2.20 a gallon wholesale for gasoline, while dispensing costs are about seven to eight cents a gallon, she said. AAFES officials said last month a special government of Japan discount allowed them to keep prices at $2.304 a gallon, despite the higher stateside market averages.

Current floor prices for regular unleaded fuel in South Korea are $1.963 a gallon, and on Guam, $1.908 a gallon, AAFES officials reported.

It’s unlikely retail prices will approach that level, at least in the near future: According to the Energy Department’s Web site (www.eia.doe.gov), the average stateside price of regular unleaded rose from $2.197 on Dec. 26 to $2.327 a gallon the week of Jan. 9, the latest data available.

Glenn said AAFES’ board of directors still is reviewing the current, market-based overseas pricing policy. The next meeting is scheduled for Feb. 7.

Crunching the numbers at the pump

To determine monthly fuel prices at its overseas gas stations, the Army and Air Force Exchange Service starts with either the previous four- or five-week Department of Energy average of gas prices in the States. To arrive at the pump price at your base, AAFES adds to that DOE average the expenses of providing fuel in an overseas location.

AAFES’ overseas gas pricing policy includes a provision that pump prices not fall below a “floor price” — the product cost plus the country-specific dispensing cost.

DOE average used for December 2005 AAFES gas price:

Grade Price per gallon

Regular $2.338

Midgrade $2.446

DOE average used for January 2006 AAFES gas price:

Grade Price per gallon

Regular $2.174

Midgrade $2.273

Japan and Okinawa midgrade unleaded dispenser price (the price at the pump) per gallon:

December: $2.304

January: $2.304

South Korea regular unleaded dispenser price per gallon:

December: $2.40

January: $2.236

Guam regular unleaded dispenser price per gallon:

December: $2.429

January: $2.269

AAFES January “floor prices”

Japan/Okinawa (after government of Japan discount): $2.304 per gallon for midgrade

South Korea: $1.963 per gallon for regular unleaded

Guam: $1.908 per gallon for regular unleaded

Source: Army and Air Force Exchange Service

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Jennifer reports on the U.S. military from Kaiserslautern, Germany, where she writes about the Air Force, Army and DODEA schools. She’s had previous assignments for Stars and Stripes in Japan, reporting from Yokota and Misawa air bases. Before Stripes, she worked for daily newspapers in Wyoming and Colorado. She’s a graduate of the College of William and Mary in Virginia.

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