Gas prices to drop Friday Published Nov. 26, 2008 By Tech. Sgt. Rey Ramon 18th Wing Public Affairs KADENA AIR BASE, Japan -- Military members and their families will finally see some relief at the fuel pumps as gas prices are set to drop from $4.19 to $2.43 a gallon on Friday. The price drop comes on the heels of a significant decrease in stateside gas prices over the last few months. While drivers have been frustrated by higher prices in Okinawa, AAFES officials explain that the dynamics of military fuel prices are very different in Japan. "Japan is in a unique situation," said Curt Knighten, Okinawa Consolidated Exchange retail business manager. "It is the only country where the Army and Air Force Exchange Service buys fuel from the Defense Energy Support Center to sell commercially simply because AAFES cannot get a cheaper price anywhere else." Since July 2008, AAFES purchased mid-grade unleaded gas from the DESC for $4.19 and added 12 cents per gallon to cover local dispensing costs, making $4.31 the actual price per gallon. A Government of Japan subsidy of 25 cents per gallon is subtracted, and $4.06 per gallon has been the price customers have paid at the pump. Mr. Knighten said the price is not a marketplace price. It cannot be compared to the price of fuel at local service stations because the standard fuel prices are set to support military service budgetary stability requirements, not to vacillate according to local market prices. "Normally, the price only changes yearly to allow the military services to create their annual budget," he said. "But because the oil markets were so volatile, the Defense Working Capital Fund ran out of money very quickly and the defense comptroller's office had to increase the prices." From December to July this year, a gallon of gas cost $3.13 and the AAFES price was $2.99. Because of the high market prices during this time, DESC lost money for several months, depleting the DWCF. The relatively cheap gas DESC can buy in some places is counteracted by the expensive gas they have to buy to support forward deployed combat forces. "This fuel is not meant to be sold commercially; it is meant to support our warfighters," said Mr. Knighten. "However, AAFES buys gasoline from the DESC in Japan." DESC has been selling fuel to AAFES at $4.19 per gallon since July 1, 2008, but the wholesale price will go down on Dec. 1, allowing AAFES to reduce the price at the pump and pass some much needed relief onto consumers. AAFES has not made any money on gas since July 1 and will continue to sell gas after Dec. 1 without making a profit.