Gas card’s effect on prices unknown
Stars and Stripes April 25, 2008
AAFES doesn’t yet know if its new fuel ration card system will impact prices at the pump, but it won’t affect prices this year, an exchange spokesman said Thursday.
The Army and Air Force Exchange Service has spent more than $2.6 million to develop the system so far, and another $1.1 million is budgeted to complete the system, according to Lt. Col. David Konop, an exchange spokesman.
Total development and five-year operating costs for the fuel ration card are expected to top more than $6.7 million, he said.
AAFES has paid for the system with cash from its capital improvement program, which funds things such as new stores and store renovations. Money for that program is generated through sales.
The card system rolls out in July and is expected to replace the decades-old coupon program completely by the end of the year.
Currently, AAFES adds 16.7 cents to each gallon of gas for dispensing costs — what it pays on average to get a gallon of gas from its supplier and into your tank. The coupon program accounts for 9.3 cents of that dispensing cost.
But just because the coupon program disappears doesn’t mean prices will drop 9.3 cents. AAFES has not been able to clarify what might cause dispensing costs to rise or fall.
While AAFES has budgeted $3 million from its capital improvement program to operate the system over the next five years, it’s not clear whether those are existing funds, or if that money will come from dispensing costs from future fuel sales.
If the card does affect dispensing costs, AAFES won’t know what that impact will be until next year, Konop said.
“The prices of gas will not be affected by this program at this time,” he added.
The fuel ration card program is a unique and high-tech system that synchs with the European bank system and allows Esso, the German government and AAFES to keep tabs on fuel usage to prevent abuse. At the request of the German government, the Army and AAFES started work on development of the program late last year.
An agreement on the system was reached in January, and all U.S. Army Europe motorists in Germany will dump their coupons and convert to the fuel card by November.
Esso also has put money into developing the fuel ration card, which will be accepted at all but two of the company’s 1,200 stations around Germany. Marc Immisch, Esso’s card operations manager for Central and Eastern Europe, said Esso won’t release details of how much it has shelled out, citing concerns about competition.
Tax-free fuel only through EssoWhen the ration card system rolls out, customers who want to buy tax-free fuel off base in Germany will have to buy through Esso, at least through November.
Negotiations to add other fuel companies, such as Aral, to the system have been postponed until after the initial rollout, according to Marc Immisch, Esso’s card operations manager for Central and Eastern Europe. Installation Management Command officials expect the rollout, which begins in July, to be complete by November.
Immisch wouldn’t say whether Esso would stay with the program if other companies were brought onboard, which would shrink Esso’s share of U.S. business.
“AAFES is an important customer to Esso and AAFES coupon holders and future card holders are very much welcome clients at our sites,” Immisch wrote in an e-mail, adding the company doesn’t want to lose its customer relationship with U.S. forces.
After the cards are doled out, the current coupon program will be only a memory. If the card system hadn’t been developed in time to take that program’s place, customers buying gas off base would have been stuck paying German prices for fuel, according to officials.