Folks,

Here is my latest for Energy and Capital, about the results of a new study for the Pentagon which says that it is “imperative” for the Department of Defense to “fundamentally transform” everything they do, immediately, to deal with our dependence on oil.

Since the DoD is the largest energy consumer in the nation, I think this is a very significant development.

–C

The Next “Greatest Generation”

2007-05-04

By Chris Nelder

That’s it . . . the Pentagon has officially smelled the coffee on peak oil.

They’re not talking efficiency improvements or pilot projects anymore. Oh no.

Now they’re singing a much more plaintive tune:

“We have to wake up. We are at the edge of a precipice and we have one foot over the edge. The only way to avoid going over is to move forward and move forward aggressively with initiatives to develop alternative fuels. Just cutting back won’t work,” said Milton R. Copulos, president of the National Defense Council Foundation and an expert on the military’s energy needs.

Wow. That’s pretty straight shootin’ there, Tex.

According to a new study by defense consulting firm LMI, the dwindling availability of oil, plus its rising costs, makes the U.S. military’s operations “unsustainable in the long term.”

The report’s emphasis appears to be centered on our dependence on unfriendly oil-producing nations, more than peak oil per se, but the prescription is the same.

They say that it is “imperative” for the Department of Defense to “fundamentally transform” everything they do, immediately. Not just weapons systems, not just base operations, not just the designs of war machines, but everything. Immediately.

For longtime readers of these pages, the alternatives suggested by the report will be familiar, including synthetic fuels (from coal and other sources), biofuels such as ethanol and biodiesel, and solar and wind power. Technologies and stocks that we love and watch closely.

The study, titled “Transforming the Way DoD Looks at Energy,” was commissioned by the Pentagon’s Office of Force Transformation and Resources, an office established to help execute former Secretary of Defense Donald Rumsfeld’s ambition of transforming the U.S. military.

That office is a pretty rarified environment, for the military. This isn’t some jarhead operation. They do experimental “skunkworks” projects. They publish policy papers on “highly adaptive, self-synchronizing, dynamically reconfigurable demand and supply networks that anticipate and stimulate actions to enhance capability or mitigate support shortfalls.” (Ohhh Kaaay?)

In short, they try to anticipate the challenges of the future.

And they are turning their attention to the security of their oil supply, for good reason.

A Desperate Dependence

For one thing, the sheer scale of the military’s dependence on oil is absolutely immense.

The Department of Defense is the largest single energy consumer in the country.

More than half of all the cargo moved by the military is just fuel. And of the material transported on the battlefield? Fuel accounts for about 80 percent. That’s a lot of effort just to move fuel around.

The cost is another major factor. The Air Force alone spends about $5 billion a year on fuel, followed closely by the Navy and Army.

The military’s energy costs have doubled since 9/11. Costs are going up so fast and so high that they’re worried about being able to afford weapons.

And the cost of having the U.S. military protect the oil supplies of the Persian Gulf . . . yes, even protecting the ones who want to blow us up . . . is around $44 billion per year.

That’s just the security cost, folks.

We import about 800 million barrels per year of black gold from the Persian Gulf. Divided into $44 billion, that works out to slightly less than $55 a barrel. When oil is trading on the open market for around $65!

If those protection costs weren’t externalized onto the U.S. military (your tax dollars at work!) but priced into the world market, I reckon that would put oil at around $120 a barrel.

Does anybody still think renewable energy is too expensive compared to oil?

I shouldn’t need to tell you that if a tiny fraction of that money were spent on R&D for clean, renewable energy sources, it would take us a long way toward advancing those technologies and making them economical and scalable.

And indeed, a fraction of it is being spent on those things. As we reported recently, the Air Force is installing the largest solar plant in the country. All four branches of the military have already begun to explore greater efficiency and renewable energy.

And the Department of Defense’s other hand, the Department of Energy, has offered over half a billion dollars in co-investment for biofuel refineries.

But there is another factor that’s probably the most worrisome of all. Rumsfeld’s push to reduce the military’s footprint by closing far-flung bases and transforming it into a network of small, agile task forces has had an unfortunate consequence: everything now has to travel greater and greater distances.

Which means a growing, not declining, thirst for liquid fuels.

“The U.S. military will have to be even more energy intense, locate in more regions of the world, employ new technologies, and manage a more complex logistics system,” according to the report. “Simply put, more miles will be traveled, both by combat units and the supply units that sustain them, which will result in increased energy consumption.”

Combined with nonstop advances in war machines, this trend has led to a sixteen-fold increase in the amount of fuel consumed per soldier per day since WWII.

And according to the report, the trend has been sharpening: In 2006, the fuel intensity per solider was double that of the previous year!

No wonder the report pulled no punches in its recommendations. This is a serious and urgent situation.

The authors admit that the changes won’t be easy, and would “challenge some of the department’s most deeply held assumptions, interests, and processes.”

But the U.S. military has no choice but to learn to love being green.

A few weeks ago, the Pentagon’s message was echoed by President Reagan’s national security adviser, Robert McFarlane, who is one among the growing ranks of security “green hawks.” He is deeply concerned about the eventuality of a successful attack on Saudi oil facilities–such as the one foiled by Saudi security just last week.

One such attack could triple the cost of a barrel of oil overnight, he warned.

Like us, McFarlane believes that renewable energy technologies such as cellulosic ethanol and solar energy could offset a substantial amount of oil consumption in a relatively short period of time.

“The solution is within our reach. We have to get busy,” he admonished.

The Next Greatest Generation?

Sixty-odd years ago, America responded to Hilter’s threat with an unprecedented mobilization of manufacturing muscle and good ol’ American ingenuity, creating a powerful war machine in short order and winning the war. Those young men and women earned their reputation as the “Greatest Generation.”

Now American business has another great security challenge at its feet: Can they find a way forward for the lumbering U.S. war machine?

Can we be the next “Greatest Generation” by greening not just our military, but our entire infrastructure?

The similarity of WWII to the present-day twin challenges of energy supplies and global warming has also apparently occurred to Prince Charles, who said this week: “We can do it, just think what they did in the last war. Things that seemed impossible were achieved almost overnight.”

Our ability to exploit advanced and alternative energy technologies, and to do more with less, is what will make it or break it now for the Land of the Free.

The very security of our country depends on it.

Until next time,

Chris