Wednesday, December 05, 2012

Biofuels are not the cure

At the end of November 2012, the United States Senate voted in favor of repealing a section of the Defense Appropriations Bill that would have blocked the DOD from purchasing biofuels if they cost more than conventional fuels.

I see that the amendment created again such unjustified hopes that only an uninformed person would believe. Supposedly biofuels investments (largely funded by taxpayers money) will give a push for clean energy investment which will create so many jobs. What more is that investment in biofuels will supposedly help reduce the Pentagon’s dependence on foreign oil, protect the fuel budget against oil price volatility and encourage the commercialization of advanced biofuels.

The American Fuel & Petrochemical Manufacturers responded quite good: “While there may be a place for biofuels in the U.S. military’s future, the decision to invest in those fuels should be based on sound economic judgment, and not political pandering that does nothing to advance national security.”

Senator James Inhofe (R-OK) unfortunately lost the battle. He was right that the added expense of biofuels was wasteful at a time when the DOD is being forced to cut significant its budget and faces the looming sequestrations cuts of the fiscal cliff.

Ray Mabus, Secretary of the Navy, should be congratulated for winning the battle, not because he was right but because he was able to convince people based on twisted or half truths. Although he still hasn’t understood the difference between aviation gasoline and jet fuel I congratulate him sincerely for one thing: He changed the way we the DOD thinks about energy.  This culture change about energy in the Navy went so far that for fiscal year 2014, the officer selection boards will give “special consideration for promotion of those men and women who’ve made energy resource management a priority and who have excelled at it.”

To the Secretary Mabus and all those who amended the Bill, I repeat some hard facts:

U.S. crude oil production (including lease condensate) averaged almost 6.5 million barrels per day in September 2012, the highest volume in nearly 15 years.

The US  dependence on foreign oil has declined since peaking in 2005. Canada is the leading supplier of crude oil to the United States. In 2011, the US was a net exporter of petroleum products. Over 50% of U.S. crude oil and petroleum products imports came from the Western Hemisphere (North, South, and Central America, and the Caribbean) during 2011. About 22% of US imports of crude oil and petroleum products came from the Persian Gulf.

Whether the US will surpass Saudi Arabia’s oil production by 2020 as claimed by the International Energy Agency or not, the real issue is that the oil prices will not drop significantly because oil is a global commodity and oil prices are largely set by international market forces.

So, instead of focusing on the oil availability and dependence, the DOD should better focus on the costs. Afterall, oil will always be available to DOD, where it needs and how much it needs. The real question is: at what cost?

Finally, even if  (next to impossible) the US military becomes independent on imported oil and procures its (domestically produces) oil at reasonable costs, the US will continue to spend over $80 billion a year protecting maritime oil transit routes and infrastructure around the world. The US military runs on oil and will continue to fight for oil.


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