Wednesday, September 17, 2008

Simple Navy Fuel Retro Math

In 2007, not including uranium or aviation fuels, the Navy spent nearly $2B (at an average of $50/barrel) to fuel its ships and subs. It's now embarked on a low cost plan to squeeze single percentage point efficiency savings using a variety of retrofit approaches including keeping barnacles off the props, running its engines more efficiently, tuning the flow of water around the hulls, and ... changing out the light bulbs.

At $4M per year, if this program reduces fuel use just by just 1% they produce a net savings of $20M for a whopping 500% ROI. Hit double the percentage, achieve double the ROI, etc. More detail here. Of course, all this figuring uses $50 per barrel (keeps it simple). In reality, avg price per year has been:

2002 - $26.1, 2003 - $31.2, 2004 - $41.7, 2005 - $56.6, 2006 - $66.1, 2007 - $72.2 (source: Guiness Atkinson Energy Brief, Sep 2008)

It's $95 today and falling ... who can say where it will be in a year? But most experts predict a price range of $80-100 in the near term. I'd say that's plenty high to keep rewarding the Navy handsomely for its retrofit actions.

Photo courtesy of Tina McEvoy @ Flickr

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