AAFES: Some gas in Europe now at ‘floor’ sale price
November 14, 2008
The cost of filling up at Army and Air Force Exchange Service gas stations in most of Europe will get a bit less expensive Saturday — depending on what drives your engine.
While gas prices in Germany, the Netherlands and the United Kingdom will fall, prices for diesel in Germany and the Netherlands will jump a bit.
An AAFES pricing policy that prevents the exchange from losing money on fuel sales is responsible for the slight bump in diesel. The policy will also prevent gas prices in Germany and the Netherlands from coming down in step with U.S. prices, on which they are partly based.
While U.S. fuel prices dropped about 18 cents per gallon on average over the past week, AAFES gas in Germany will drop between 7.2 and 12.9 cents a gallon. Prices in the Netherlands will fall between 6.9 cents and 11.6 cents a gallon.
According to AAFES, prices for all grades of fuel sold in Germany, the Netherlands, Turkey and the Azores are now at the "floor" selling price. That means the exchange would lose money if it were to sell fuel using the standard price formula, which adds the cost of dispensing fuel in a given country to the U.S. average from the Department of Energy. Instead, the exchange is selling fuel at or near cost.
The policy had kept U.K. prices from keeping pace with declines in the U.S., but that’s no longer the case. Premium gas will plunge 38 cents a gallon in the U.K., midgrade will fall 27.9 cents and diesel will drop 28.6 cents a gallon.
According to an Energy Information Administration forecast released Wednesday, prices are expected to remain relatively low through the rest of 2008 and 2009.
"Under the current economic assumptions and assuming no major crude oil supply disruptions, [West Texas Intermediate crude] prices are expected to average $63.50 per barrel in 2009," according to the forecast. In October, the EIA forecasted WTI would average $112 per barrel in 2009.
"Further deterioration in actual or expected global economic growth as a fallout of the current financial crisis may lead to even lower oil prices," according to the EIA’s latest forecast.