Center for a New American Security

Worsening tensions with Iran in recent weeks are in part to blame for higher oil and gas prices. In response to these higher prices, there has been a lot of discussion about how to reduce our demand for oil, including with the use of more renewable and alternative energy for electricity generation. And while I certainly support the use of more diverse energy technologies to meet our electricity needs, it is worth remembering that liquid fuels are the real albatross when it comes to moving away from our outsized dependence on oil. Addressing that challenge requires a serious reduction in gas consumption in the near term, through conservation and efficiency practices, and a chemical replacement in the long term.

According to the U.S. Energy Information Agency, about two-thirds of oil is consumed by the transportation sector in the United States. This includes gasoline for vehicles, as well as diesel, jet and residual fuels. As we think about how to reduce our demand for oil, diversifying our liquid fuel sources will be crucial. There are a lot of challenges of course with developing a liquid fuel replacement. The fuels must be cleaner than conventional fossil fuels so that we are making progress toward reducing our greenhouse gas emissions and contribution to global climate change. The fuels must be chemically equivalent to fossil fuel so that they are capable of being dropped in to existing vehicles. This is extremely important and has implications both for vehicle performance and the longevity of our existing infrastructure that transports fuel around the country (i.e., pipelines). 

The U.S. military is giving serious thought about its dependence on oil, in part as a response to higher oil and gas prices, as well as concerns with assured access to fuel in the future. Indeed, oil and gas prices take a toll on the Department of Defense and have implications for policy, especially in this austere budget environment. Every $10 increase in a barrel of oil adds about $1.3 billion to the department’s gasoline bill. Of course, many of the efforts the department is currently leading to develop alternative fuels are generating fuels that are still today relatively more expensive than conventional gasoline. But as experts correctly note, these fuels are still in the research and development phase. As the companies producing these alternative fuels move toward commercial deployment they will become cost competitive with oil – some of them within the next decade or so.  

The long-term concern, and perhaps the most important consideration for the Department of Defense as it looks to the future, is assured access to fuel. Increasing global demand could have serious implications for the military’s ability to easily acquire the oil and gas it needs to fuel its force and execute its missions. Some analysts suggest that by 2050 access to oil will become severely constrained, even if demand were to remain flat today. Having a diverse set of options for drop-in fuel helps the military hedge against this looming uncertainty and provides some assurance that the military will be capable of meeting its future fuel requirements, and more importantly, protecting U.S. interests at home and abroad. 

John Nagl and Christine Parthemore authored a seminal report in 2010 laying out twelve steps the Department of Defense should take in moving away from its oil dependence over the next 30 years. It is a plan worth revisiting and taking seriously as we look at a future with higher oil prices and constrained supply.