An Unlikely New Supporter For Alternative Energy

Kent Moors: During a biofuels conference at Mississippi State University last week, Navy Secretary Ray Mabus announced that his branch would be leading the charge to lessen the U.S. Department of Defense’s (DOD) dependence on fossil fuels.

This involves a rather large chunk of traditional fuel usage.

On average, the federal government consumes about 2% of the fossil fuels used in the United States – and the DOD accounts for about 90% of that.

With the Obama administration emphasizing a move to alternative and renewable fuel sources, Mabus is signaling that the military is on board – sort of.

The Trouble with Foreign Oil

As a former governor of Mississippi and ambassador to Saudi Arabia, Secretary Mabus knows something about the position of oil in American foreign policy.

He noted during the conference that, for every $1 rise in the cost of crude oil, the Navy has to come up with at least $32 million.

So when the Libyan crisis hit earlier this year, and oil spiked $30 a barrel, that translated into almost $1 billion of additional costs to the Navy. It’s no wonder, then, that Mabus is committed to meeting 50% of the Navy’s onshore and fleet fuel needs with non-fossil sources by 2020.

Additionally, in what is now mantra from both sides of the political aisle, reliance on foreign oil sources presents a national security problem.

“When we did an examination of the vulnerabilities of the Navy and Marine Corps, fuel rose to the top of the list pretty fast,” Mabus said. “We simply buy too much fossil fuel from actual and potentially volatile places. We would never allow some of these countries we buy fuel from to build our ships, our aircraft, our ground vehicles – but because we depend on them for fuel, we give them a say in whether our ships sail, our aircraft fly, our ground vehicles operate.”

The push seems serious enough, and it does reflect similar statements coming from other branches of the military.

But questions remain: What are the alternative sources? How much volume can each genuinely give to the effort? And what are the possible drawbacks of such alternatives?

Biofuels to the Rescue

From the Navy’s perspective, biofuels have shown some serious promise.

In certain theaters of operation, bio additives are already in use for both jet fuel and lighter vessel options. And the initial results have been quite encouraging.

(As a personal aside, I can attest to what can actually be put in the engine of a tactical craft. During my stint in counterintelligence during the Vietnam conflict, not everything we put in my forward-deployed PBR MK2 turbo-charged swift boat was from the “requisitioned and approved fuel” file! But it was certainly “turbo-charged” when the crew got done with it.)

kent_moorsBut to make the move Mabus is talking about, that requires a consistent and strategically sound supply and deployment policy.

Industry sources will tell you that the formula for combining biofuels and conventional sources is crucial.

Most of the bio alternatives currently in vogue will result in a substantial reduction in power and raise significant concerns over engine damage.

It does not help to provide additional security over supply, only to end up with a rising down-time problem.

Toward Unified Fueling Alternatives

Now the Navy can make strides in how onshore vehicles are fueled.

Some of the experiments with fuel cell vehicles, natural gas-power systems, and bio mixes already being conducted by the Army will certainly be useful. Here, at least, a unified set of fueling alternatives that would allow application across military branches may well emerge.

The Air Force also has had some success with new mixtures of jet fuel that introduce non-fossil-fuel based products. That can be of direct benefit to the Navy’s carrier strike aircraft.

To make the DOD’s shift from fossil fuels work, however, a new research and development (R&D) support network is essential.

That is where the private sector comes in.

Research institutes, energy companies, and tech start-ups are going to be essential if the military is to forge this new direction toward alternative fuels.

Look for the post-Iraq era military fuel needs to lead to resurgence in alternative fuel research and development in the United States.

Consider it the latest “peace bonus.”

Written By Kent Moors, Ph.D. From Money Morning

Dr. Kent F. Moors is an internationally recognized expert in global risk management, oil/natural gas policy and finance, cross-border capital flows, emerging market economic and fiscal development, political, financial and market risk assessment. He is the executive managing partner of Risk Management Associates International LLP (RMAI), a full-service, global-management-consulting and executive training firm. Moors has been an advisor to the highest levels of the U.S., Russian, Kazakh, Bahamian, Iraqi and Kurdish governments, to the governors of several U.S. states, and to the premiers of two Canadian provinces. He’s served as a consultant to private companies, financial institutions and law firms in 25 countries and has appeared more than 1,400 times as a featured radio-and-television commentator in North America, Europe and Russia, appearing on ABC, BBC, Bloomberg TV, CBS, CNN, NBC, Russian RTV and regularly on Fox Business Network.

Moors is a contributing editor to the two current leading post-Soviet oil and natural gas publications (Russian Petroleum Investorand Caspian Investor), monthly digests in Middle Eastern and Eurasian market developments, as well as six previous analytical series targeting post-Soviet and emerging markets. He also directs WorldTrade Executive’s Russian and Caspian Basin Special Projects Division. The effort brings together specialists from North America, Europe, the former Soviet Union and Central Asia in an integrated electronic network allowing rapid response to global energy and financial developments.

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