A proposal to drop federal taxes from gas sales could drop driving up costs for AAFES customers, but only if U.S. prices fall, according to an Army and Air Force Exchange Service spokesman.

Nobody — stateside or in Europe — is getting a break this week, though.

Drivers in Germany and the United Kingdom will pay about a dime more per gallon for all grades of gasoline and 3.4 cents more per gallon for diesel starting Saturday. In the Netherlands, where the exchange sells fuel at cost, prices for all grades of gas and diesel drop between 1.4 cents and 6.7 cents per gallon.

In Italy, where prices are set by the Navy’s Tax-Free office, gas and diesel prices shot up again Wednesday. Gas and diesel both sell for more than $4 per gallon there. But it’s the weak dollar, not higher stateside prices, to blame in Italy.

“This is a nonprofit program, but in the past five years, we’ve seen the purchasing power of the dollar decrease by approximately 37 percent against the euro,” said Bart Di Muccio, administrator for the Tax-Free office in Naples.

U.S. fuel prices, on which AAFES prices are largely based, continued plowing into record territory for a fifth straight week, according to the U.S. Department of Energy — a trend that AAFES has matched.

Those rising prices might be contributing to a recent slowdown in sales.

The exchange’s fuel sales dipped from an average of 113,693 gallons sold per day in February to 102,357 per day in March, according to Lt. Col David Konop, an AAFES spokesman. By way of comparison, the command sold more than 136,000 gallons of fuel per day in February 2007, and more than 125,000 gallons per day in March 2007.

High fuel costs are one explanation, but other factors, such as deployments or the movement of units back to the U.S., could also have an impact, Konop noted.

Fuel sales in the States are also down, according to the Energy Department, and many analysts blame the downturn on high pump prices. Sens. John McCain and Hillary Rodham Clinton both proposed plans to drop the 18.4-cent federal gas tax in order to bring relief to motorists.

That could be good news for AAFES customers.

“Let’s say next week prices drop 18 cents because of that and the average goes down 18 cents” then AAFES prices will drop 18 cents, Konop said.

But dropping the federal gas tax doesn’t guarantee a price drop. There is still a finite amount of fuel, and prices are driven mostly by supply and demand. While demand might go up if prices fall, supply won’t increase — a situation economists say would likely push prices back up and benefit the oil companies, not consumers, according to The Associated Press.

Stars and Stripes reporter Lisa M. Novak contributed to this report.

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