Should DoD be Concerned with Potential Petroleum Supply Shortage and What Could It Do to Stimulate Alternative Fuels Development?
Final rept. Jan-Dec 2007
INSTITUTE FOR DEFENSE ANALYSES ALEXANDRIA VA
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This white paper addresses the issue of energy supply challenges for the Department of defense DoD in the context of greater national energy issues, and it proposes a strategy that DoD might consider to hedge against future energy supply and cost uncertainties, while helping to drive the market development of select energy alternatives for the nation as a whole. The first part of the work is a brief assessment of the energy oil challenges facing the United States and DoD. The assessment aims to distinguish genuine problems from issues that are either not new or are outright red herrings. The authors argue that commonly cited goals of DoD energy security -- independence from the Middle East and assured fuel access -- miss the point. Oil from the Middle East accounts for less than 20 of total U.S. imports, but the Middle East, because of its large global market share, effectively sets prices for all oil, regardless of its origination. Instead, DoD faces two different but urgent concerns over its fuel supply costs the overhead logistics costs associated with fuel use and exposure to unpredictable price swings. Improving the fuel efficiency of fleet vehicles, thus lowering demand for fuel, will reduce the logistics burden. Developing alternative fuel sources, among other strategies, may contribute to price stability. The second part of the work outlines a proposal for mitigating DoDs exposure to oil price instability, which affects DoDs ability to budget and plan. Moreover, development of an alternative fuel supply would represent a long-term investment for which DoD has a unique need, on account of the long lead times required for development and acquisition of weapons systems that themselves have long lifetimes.
- Geology, Geochemistry and Mineralogy
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- Logistics, Military Facilities and Supplies