Managing Military Energy for Greater Cost Effectiveness

 

 

 

 

 

 

Michael E. Canes
Distinguished Fellow

LMI

(McLean, VA)

The energy economy within which the U.S. military operates is different from that of the civilian sector. The military, when asked to act, consumes at the point of conflict, in a theater of operations.  In such circumstances, the supply of fuels can be subject to enemy action, increasing its cost.  As we shall see, that increased cost can be many times that of fuel consumed in the civilian economy.

In this paper we present estimates of what it costs the military to supply fuel to troops engaged in action abroad.  We then describe recent actions on the part of the Department of Defense (DoD) to deal with this cost, and which of these appear the most promising.  Finally, we offer a few conclusions.

Background

In 2001 and again in 2008, the Defense Science Board (DSB), an advisory body to the Secretary of Defense, published studies pointing out that the cost of supplying fuel to military forces in a theater of operations many times exceeds that of the purchase cost of the fuel itself.[1] Further, the military had failed to incorporate the true cost of fuel delivery into its analyses of weapons systems alternatives, and therefore had undervalued energy efficiency in such systems. According to the DSB, energy efficiency translates directly into greater warfighting capability, e.g., through providing more vehicle range, requiring fewer mid-air refuelings and the like.

 

The U.S. Congress eventually became involved.  The 2009 National Defense Authorization Act directed the Secretary of Defense to “require (that) life-cycle cost analysis for new capabilities include the fully burdened cost of fuel (FBCF) during analysis of alternatives and evaluation of alternatives and acquisition program design trades.”

 

 

 

 

 

Costs of Fuel Supply to a Theater of Operations

 

As might be expected, the magnitude of the FBCF is related to the scenario within which fuel is supplied to operating forces.  It also is related to whether enemy action is expected to interdict supply lines and to defense assets used to counter such interdiction.

 

In 2007, the DoD Planning, Analysis and Evaluation (PA&E) office estimated the FBCF for delivery at domestic sites and abroad.  Cost estimates first were made for domestic installations, and an average taken over several such installations. These costs included the direct purchase cost of fuel, pertinent delivery equipment, and dedicated personnel. This yielded an estimated cost (in today’s dollars and price of fuel) of $7.81/gallon.

 

PA&E worked with the Institute for Defense Analyses to produce FBCF estimates in a theater of operations, taking into account the defense assets used to protect fuel convoys. The resulting estimates, again in today’s dollars, were $9.55/gallon for low-intensity warfare, $14.16/gallon for medium-intensity, and $21.86/gallon for high-intensity.

 

More recent estimates were provided at a Military Operations Research Society workshop in November, 2009.[2] A Marine Corps analysis of the FBCF in Afghanistan took two different approaches to estimation, shown as range endpoints in Table 1 for each of three fuel delivery scenarios.

 

 

 

Table 1. FBCF for Delivery to FOB in Afghanistan (35 Miles from Base Camp)

Delivery method

FBCF ($/gallon)

Convoy delivery/security

9.84–12.64

Convoy delivery/air security

16.72–19.89

Air delivery/security

30.96–32.93

 

 

 

Finally, an LMI study pointed out that the numbers do not account for attrition of fuel, equipment and personnel in delivering fuel to the front lines.[3] It estimated the costs of these losses at $0.51/gallon in a low intensity conflict and $0.70/gallon in a medium intensity, numbers which should be added to those above to more accurately estimate the FBCF.

 

From the above, the FBCF for domestic use is about $8/gallon, and that of delivery to a theater anywhere from $9.50/gallon to $34/gallon, depending on the level of security required and the military assets used to provide such security.

 

Recent DoD Actions

 

The Assistant Secretary of Defense for Operational Energy Plans and Programs (OEPP) is the focal point of DoD activities to deal with operational energy matters.  That office published a DoD Energy Strategy and an Implementation Plan which called upon the services to reduce operational energy demand, develop substitute forms of energy, and develop measures, doctrine, and strategy to ensure continued progress.[4]

 

In Fiscal Year 2012 the four military services sponsored 357 operational energy initiatives (OEIs) costing about $1.4 billion.  The initiatives include replacement of capital equipment, substitution of unmanned for manned vehicles, development of substitute forms of energy, more sophisticated forms of energy management, and research and development.

 

A variety of energy-related investments have resulted.  For example, experience in Iraq suggested that air conditioning of tents was highly energy inefficient, but could be materially improved through coating the tents with foam insulation.  The services also began utilizing photovoltaic cells along with battery storage to curb the demand for generator-supplied power and hence the demand for fuel at forward operating bases.

 

Though many of the OEIs initiated by the services will prove helpful, their effects likely will be limited.  That is because the major sources of military fuel consumption are weapons platforms such as tanks and other armored vehicles, trucks, aircraft, ships and generators.  For these systems, large reductions will require replacement by entirely new platforms or of major components such as engines, actuators, motors, etc.

 

Such replacement is likely to prove cost effective in most instances.  The systematic undervaluation of energy cost by DoD over decades implies that other attributes were valued too highly relative to energy efficiency, and that tactical vehicles and weapons systems today are over-consuming fuel.  Unfortunately, it will take decades to replace the present inventory of platforms, but improvement should take place steadily as this replacement proceeds.

 

An example illustrates the point.  Recently, DoD began procuring a new generation of generators known as Advanced Medium-size Mobile Power Source (AMMPS).  According to DoD data, AMMPS generators on average consume 22 percent less fuel than current Tactical Quiet Generators, weigh less and are more reliable.[5] Their cost is slightly higher, but the difference is quickly recovered through fuel and maintenance savings, such that the net present value of investment in AMMPS is large and positive.  Also, lower weight results in their being towed by smaller vehicles, further curbing fuel consumption.  Since generators account for the single largest share of Army fuel consumption during wartime, both the energy and overall resource savings appear substantial.[6]

 

Conclusions

 

The U.S. military faces daunting energy challenges that translate into high costs of delivering fuel to operating forces.  For years DoD based its investment analyses on the purchase price of fuel, not the full cost of delivery.  This resulted in an undervaluation of energy efficiency relative to other qualities, raising costs and decreasing operational effectiveness.  That has changed, and DoD now directs the services to incorporate the FBCF into its analyses of alternatives.  Over time, this should lead to more energy efficient weapons systems, cost effectively curbing fuel consumption and increasing operational effectiveness.

 

 

 


 

[1] “More Capable Warfighting Through Reduced Fuel Burden,” Report of the Defense Science Board, January 2001, and “More Fight – Less Fuel,” Report of the Defense Science Board Task Force on DoD Energy Strategy, February  2008.

 

[2] Edward Blankenship and Randal Cole, “Fuel and Water for OEF: Towards Developing ‘Fully Burdened Costs,’” Presented at Military Operations Research Society Energy Workshop, November 30, 2009.

 

[3] Michael E. Canes, Roger A. Leuken and Nathan J. Shepherd, “DARPA Workshop on Geothermal Energy for Military Operations,” LMI Report DRP90T1, May 2010.

 

[4] “Energy for the Warfighter: Operational Energy Strategy,” DoD, March 2011 and “Operational Energy Strategy: Implementation Plan,” DoD, March 2012.

 

[5] Michael E. Canes, “Cost-Effectiveness of Advanced Medium-Sized Mobile Power Source,” Unpublished paper,  January 2011.

 

[6] According to Army sources, generators account for about 33 percent of fuel consumption in wartime, combat aircraft 30 percent, tactical vehicles 17 percent, combat vehicles 15 percent, and other vehicles about 5 percent.  In the paper cited in Note 6, Canes estimated the net present value of resource savings to the active Army (not counting reserve forces or the Army National Guard) from complete replacement of TQGs by AMMPS at about $1.7 billion.

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