RAND Says US Military Cannot Reduce Biofuels Price; Should Exit Development; BIO Disagrees

by Jim Lane (Biofuels Digest) In Washington, a new study by the RAND Corporation says that the US military’s petroleum demand of 340,000 barrels per day, compared to global demand of 87 million barrels per day, isn’t large enough of a scale to impact the production cost of biofuels so should therefore stop spending money on more expensive alternative fuels. READ MORE and MORE (Reuters) and MORE (RAND Corporation) and MORE (American Enterprise Institute)
RAND Corporation Press Release:
Energy purchases made by the U.S. Department of Defense do not influence world oil prices, making cutting fuel use the only effective choice to reduce what the Pentagon spends on petroleum fuels, according to new reports issued today by the RAND Corporation.
The U.S. military can continue to have an important role in promoting stability in major oil producing regions and by helping protect the flow of energy through major transit corridors and on the high seas, the report finds.
These are among the conclusions of the first three of a four-volume series of reports examining the role of the U.S. Air Force in promoting international energy security conducted by RAND, a nonprofit research organization.
The reports provide a broad overview of the dynamics of the world oil market (volume 1), in addition to examining energy security issues in Turkey and the Caspian (volume 2), and the role the Air Force plays in assisting the U.S. Navy in protecting the sea lanes from Hormuz to Asia (volume 3).
A fourth volume examining energy security in Nigeria and other nations in the Gulf of Guinea is scheduled for later publication.
"While the Department of Defense is one of the world's largest fuel users, its consumption of about 340,000 barrels per day is a small fraction—less than one-half of one percent—of global petroleum demand," said James Bartis, a RAND senior policy researcher and the author of the first volume. "Considering that the United States produces more than 8 million barrels of oil per day domestically, there is no credible scenario in which the U.S. military would be unable to access the supplies of fuel it needs to defend the nation."
The report emphasizes that future oil prices cannot be predicted. "Too often military planners are afflicted with petroleum anxiety," Bartis said. "They think prices are heading in only one direction: up. But history teaches us otherwise."
Bartis said that although the military will have access to the wholesale fuel supplies that it needs, the purchase price could be uncomfortably high. The study finds that as fuel consumers, the military services have only one effective option to deal with high petroleum prices: use less fuel.
This can be done by purchasing more energy-efficient equipment, by adopting maneuver schemes that are more energy efficient and, in the short term, by implementing other energy conservation measures. The studies find that alternative liquid fuels do not offer the Department of Defense a way to appreciably reduce fuel costs.
"Pending a major technical breakthrough, renewable jet and marine fuels will continue to be far more expensive than petroleum-based fuels," Bartis said.
The study highlights the growing importance of the Caspian region for global oil supplies. In this region, energy infrastructure protection appears to be addressed fairly well, considering relatively low threat levels.
"Turkey has ambitions to become an international energy hub, moving oil and natural gas from the Caucasus, Central Asia and the Middle East to Europe," said Andrew Weiss, the lead author for this portion of the study. "To achieve that ambition, Turkey needs to improve protection of its pipelines and energy infrastructure, which have been the target of repeated terrorist attacks by the Kurdistan Workers Party (PKK)."
Weiss highlighted oil tanker traffic through the Bosporus Strait as another vulnerable area.
The Asia sea lanes are a growing security concern because of the increasing dependence of Asian economies on imported oil and natural gas from the Middle East. Three-fourths of the oil passing through the Strait of Hormuz is heading toward Asia, while less than 15 percent is directed toward the United States.
"Those statistics alone suggest that overall U.S. interests are best served by a multinational approach to the protection of the energy sea lanes to Asia," said RAND senior fellow Ryan Henry, who authored the third volume of the series. "But it goes far deeper than that. For example, multinational cooperation in sea lane protection provides a means of dampening the simmering tensions and lingering disputes that prevail within Asia."
The research was sponsored by the Office of Operational Planning, Policy and Strategy, Deputy Chief of Staff for Operations, Plans and Requirements of the U.S. Air Force. It was conducted within the Strategy and Doctrine Program of RAND Project AIR FORCE.
RAND Project AIR FORCE is a federally funded research and development center for studies and analysis aimed at providing independent policy alternatives for the U.S. Air Force. READ MORE