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At a time when Congress is looking to cut the budget, the DoD is pleading for $517M USD in extra funding to keep up with the soaring costs of crude oil.  (Source: Tatan Syuflana/AP)

Without extra funding, the U.S. Air Force could be grounded and unable to defend the nation.  (Source: USAF)

The U.S. DoD is hoping that biofuels will hold the key to safe, cheap fuel in the long term.  (Source: California Polytechnic State University's Controlled Environment Agriculture & Energy Working Group)
Soaring gas prices have hit defense budgets, and served as a reminder of the volatility of oil

Between Iraq and Afghanistan alone, the U.S. Department of Defense needed an enormous amount of fuel last year -- the U.S. government uses 20 to 50 million gallons of fuel every month in Afghanistan to support operations. In fact, of the $15B USD it spent on fuel, 75 percent went towards operations, such as the efforts in these Middle Eastern nations.  

I. Massive Demand, Soaring Costs

The thirstiest branch of the armed forces was the U.S. Air Force (USAF).  They used $8.1B USD in fuel, including $7B USD in costs for jet fuel.  The USAF burned through 54 percent of the DoD's fuel budget, sipping 2.5 billion gallons of fuel.

The aforementioned figures come courtesy of Air Force assistant secretary for installations, environment and logistics Terry Yonkers.  Speaking at the Pew Charitable Trusts in Washington, Asst. Secretary Yonkers expressed alarm at rising fuel costs and the impact they might have on the nation's ability to defend itself.

At a time when Congress is looking to slash the budget, the DoD is requesting an injection of $517M USD in extra cash to keep up with rising oil prices.  According to the request, the price per barrel of oil rose from $127.26 in April to $165.90 by June 1.

In reality, that $517M USD will likely not be nearly enough to cover the 30 percent higher costs, considering that 30 percent of last year's budget totaled almost $5B USD.  But facing a cuts-minded Congress, that may be the best the DoD can hope for. 

The DoD is running on empty and desperately needs a solution in the long term to secure the nation in the face of continually rising fuel costs.  Asst. Secretary Yonkers believes the answer lies in biofuels, like algae-based oil.  Currently biofuels are quite expensive, costing $40 to $50 USD per gallon.  Given that there's about 45 gallons of petroleum products in a barrel of crude oil, petroleum was at approximately $3.69 USD/gallon, or roughly 1/11th of the cost of biofuel.

However, as biofuel production ramps up, costs are expected to greatly decline.  Asst. Secretary Yonkers greets that possibility with optimism, stating, "If they'll produce it, we'll buy it."

II. Biofuels v. Domestic Drilling

New biofuels like algae have an advantage over other alternative fuels like ethanol, in that they contain the larger hydrocarbons necessary for jet fuel and other high-energy blends.  In that regard, they're quite similar to petroleum products.  Because of that, 98 percent of the USAF's aircraft can run on a biofuel blend (though the allowed amount of biofuel in the blend is application-dependent).

One obstacle is that while the DoD commands a substantial stake in the U.S. fuel market, it's still a small player in terms of total demand.  Last year it reportedly accounted for 2 percent of the nation's fuel budget.  That is a large amount, but it also represents how much the DoD needs the other 98 percent, which includes civilian and corporate use, to support biofuel development.

In the short term, the U.S. could look to domestic drilling options to try to drop fuel prices.  However, there are issues there too.  Most "easy" fuel in the U.S. has already been extracted -- much of the remaining fuel requires complex extraction procedures.

Some studies indicate that extraction from oil shales and their ilk can be done safely, with minimal environmental impact.  But as NPR's "This American Life" points out, this research is often biased by the fact that top petroleum research universities are dependent on petroleum grants for funding and are afraid to publish negative studies.

The actual impact of domestic drilling may be significantly higher than the oil and gas companies would wish the public to believe, as evidenced by recent environmental damage in Appalachian rivers, and the recent earthquakes that struck Arkansas when natural gas injection wells appeared to disturb local fault lines.

On the other hand, there may be cases where the costs outweigh the benefits, and domestic drilling makes sense.  After all, environmentalists often paint an equally biased picture, albeit with less financial resources.  The truth, as is typical in such debates, likely lies in the middle.

At the end of the day, though America faces the real issue that its domestic petroleum supply is a finite product and will run out -- sooner or later.  That leaves America dependent on foreign oil, which is volatile both in price and in politics.

The tough question is what to replace the oil with.  

III. The Long Term View

Biofuels seem an attractive alternative, given that they only require sunlight, typically (as most are plant based) and can produce high-octane fuel blends resembling petroleum products.  Further, these blends typically are cleaner, with less sulfides and nitrides than typical petroleum fuel.

Of course the DoD could also look to nuclear fission power, combined with EVs to greatly reduce its transportation related fuel consumption in the short term.  Such a suggestion might have trouble flying in nuclear fearful America, though.

In the long run fusion may also provide a possible alternative energy source for defense transportation.  But the problem of energy storage is likely to remain for some time.  Unless researchers can develop a fusion reactor small enough to fit in a jet, or a battery vastly more energy-dense than today's designs, the only solution is a chemical fuel.  And the choice for chemical fuel today are pretty much oil, ethanol, or biofuels.

The DoD thinks biofuels are the most attractive of those choices to use in defending the United States.

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RE: Maybe I'm confused
By Iaiken on 7/11/2011 3:34:11 PM , Rating: 1
But the claim that military spending alone is racking up these massive deficits we're facing is completely unfounded and false.

which is fine because I never claimed that...

In fact, I would argue that shoring up tax incomes is just as important as cutting funding across the board.

If you paid even so much as a penny in taxes for 2010, then you paid more in taxes than General Electric ($3.2B in refunds on $15B profit). The story repeats itself over and over with large multinationals raking in huge profits and paying effectively zero tax.

Figures out of the Harvard school of business suggest that under a simplified tax code the US government could have cut the corporate tax rate to 25% (a drop of 10% to be the lowest of the G20) and still have realized an increase of $60B in revenues for FY2010. Meanwhile, an estimated 78% of businesses, large and small, would have experienced an average tax cut of 9% and tax breaks for struggling companies would have remained entirely unaffected.

Just food for thought...

RE: Maybe I'm confused
By SPOOFE on 7/11/2011 3:47:01 PM , Rating: 2
If you paid even so much as a penny in taxes for 2010, then you paid more in taxes than General Electric

So half the country pays the same taxes as GE. I can live with that.

RE: Maybe I'm confused
By Reclaimer77 on 7/11/2011 6:50:54 PM , Rating: 3
So increasing the tax burden on those who create jobs is your key to cutting the deficit?

Boy if I didn't know you were a Liberal already that one would sure be a red flag.

By the way you guys are flat out wrong about GE. Of course they paid taxes. You and Jason Mick and everyone else puppeting the New York Times piece obviously can't be bothered to look up the facts for yourself.

What exactly are "federal taxes"? Well there are income taxes, I'm pretty sure GE employees didn't get away without paying those. No matter how good their tax department might be, pretty sure they couldn't work GE's personal liability to zero. State taxes? Yup, pretty sure those were paid. Fuel taxes etc etc? Paid.

GE also lost billions in the financial crisis, which gave them a nice NOL carryforward for the next few years. Again, completely legal. The article gives brief mention to the losses, but curiously, does not quantify how they might have contributed to GE's lower tax bill even though I'm sure GE would have provided those numbers. The treatment of the losses, moreover, is confusingly opaque, and rather buried.

But to simply say "GE payed no taxes" is a gross lie. They generated billions in taxes, and they paid all taxes legally required of them to pay. You and the New York Times seem to think companies like GE have a moral obligation to maximize the taxes it pays. Outrageous!

Stop believing the Leftist media hype.

"Mac OS X is like living in a farmhouse in the country with no locks, and Windows is living in a house with bars on the windows in the bad part of town." -- Charlie Miller

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