Fuel-Cost Worries Extend to Pentagon

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By William H. McMichael and Rick Maze

The skyrocketing cost of fuel isn't just hitting U.S. drivers in the pocketbook - it's blowing a bit of a hole in the Pentagon budget as well.

In a revised request for supplemental war funding for fiscal 2009, submitted May 2, defense officials have asked Congress to appropriate $3.69 billion for all fuels, a $2.2 billion increase over their initial request.

That, of course, looks far ahead and could still prove to be inadequate. According to Pentagon budget documents, the request would support a crude oil price of $97.19 per barrel - and also assumes that the military's overall fuel costs will drop by 4.8 percent.

The current world price, however, has climbed to and is hovering around $120 per barrel, and many analysts think rising global demand and other factors will keep prices high.

And 2009 isn't the only concern; the Pentagon needs more money for fuel to cover the remaining five months of this fiscal year.

This would come by way of the $108 billion war supplemental appropriation request, which has yet to be approved. The Pentagon has asked for a total of $1.9 billion for fuel, an increase of $281.4 million over its original supplemental request.

All told, that's an additional $2.48 billion on top of the amounts included in the Pentagon's 2008 and 2009 base budgets - and defense officials already acknowledge that the 2009 supplemental request won't cover that entire fiscal year.

That would buy another 19 F-22 fighters for the Air Force, or 36 MV-22 Ospreys for the Marine Corps.

In the seven months ending in March, the Pentagon's average monthly cost for its most-used jet fuel, JP-8, rose 34 percent, from $2.34 to $3.13 per gallon, according to the Defense Logistics Agency. The cost of JP-5, used primarily by Navy jets operating at sea, increased from $2.22 to $2.94 per gallon.

Regular gasoline jumped from $2 to $2.79 per gallon, or 40 percent, over the same period.

Only diesel fuel's rise was negligible, increasing just 5 cents per gallon.

The Pentagon's prices normally do not fluctuate much because DLA's Defense Energy Support Center buys in bulk and sells fuel to the individual services at a "standard price" based on market projections for the ensuing year, according to DLA spokesman Jack Hooper.

In September 2007, for example, DESC set the standard price of JP-8 at $2.31 per gallon.

In a less volatile market, that price might have been good for the next 12 months. But the market forced a change and in December, DESC raised its price for JP-8 to $3.04 per gallon.

Other current standard prices: JP-5 is $3.06 per gallon; regular gasoline is $2.97 per gallon; and diesel stands at $3.04 per gallon.

Other than going back to Congress to ask for more money, the Pentagon's options are limited. The Air Force is exploring synthetic fuels and "biofuels," and has requested $26.9 million for fiscal 2009 to fund that effort. The Air Force would like to certify its entire fleet to run on synthetics by 2011.

But the testing is an extensive process that must explore not only whether a jet will operate with alternatives, but whether such fuels cause greater wear on engines or create a need for more maintenance than standard fuels.

"Just because it'll burn this stuff doesn't mean it's the best stuff to put in it," Hooper said.

Meanwhile, Congress wants the Pentagon - whose Abrams tanks use six gallons of fuel to travel one mile - to make fuel efficiency a part of its future planning.

And the House Armed Services readiness subcommittee approved legislation May 8 that would require the secretary of defense "to consider the full burdened cost of fuel and energy efficiency in the requirements development and acquisition process," said Rep. J. Randy Forbes of Virginia, the panel's ranking Republican.

Forbes said the panel's portion of the 2008 defense authorization bill also includes language demanding a report from the Pentagon on ways to improve energy efficiency as part of the process of bringing a war-depleted force back to a full state of readiness.

"These provisions are terrific first steps in reducing operating costs and reducing the logistics burden of fuel supply," he said.

Forbes indicated that his worry is more than just the cost of fuel.

Being less dependent on fuel delivery would "reduce risk and enable our military forces to be more agile and more efficient on the battlefield," he said.