50 Shades of Haze Grey: The Navy Biofuel Initiative Under the Defense Production Act

Here is another suggestion for those lazy, hazy days of summer that are now upon us.  The authors of great summertime bodice rippers over at the Congressional Research Service have served up another slice of beach reading with the publication of their new report: “The Navy Biofuel Initiative Under the Defense Production Act” .    

It starts with a bold adventure:

The Navy proposes to use authority under the Defense Production Act of 1950 (DPA) to develop a domestic industrial capacity to supply biofuel. In its FY2013 Congressional Budget Request, the Department of Energy (DOE) requested authority to transfer funds to the DPA Fund, offering the justification that it will support the MOU with the technical expertise to move pilot-scale demonstration projects to larger-scale production in support of the Navy's Green Fleet Goal. Agriculture, Energy, and the Navy expect to fund this initiative at $510 million in aggregate over three years.

It blends in history:

In the past, Congress has found it in the interest of national defense preparedness for government to assure that a domestic industrial capacity exists to produce fuel. Congress set aside the (now depleted) Naval Oil Reserves and Oil Shale Reserves to provide for the Navy's fuel requirements. Congress later promoted alternative fuel from coal through the U.S. Synthetic Liquid Fuels Act of 1944 to aid the execution of World War II, and to conserve and increase national oil resources. The act authorized the Secretary of the Interior to construct, maintain, and operate plants producing synthetic liquid fuel from coal, oil shale, and agricultural and forestry products.

 During the Korean War, the DPA authorized the President to have liquid fuels processed and refined for government use or resale, and to make improvements to government- or privately-owned facilities engaged in processing and refining liquid fuels when it would aid the national defense. In 1980, Congress amended the DPA to authorize the President's purchase of synthetic fuels for national defense.
 Most recently, the Energy Policy Act of 2005 directed the Secretary of Energy, in cooperation with the Secretaries of the Interior and Defense, to develop a program to accelerate the commercial development of strategic unconventional fuels, including but not limited to oil shale and tar sands resources within the United States. Except for exploiting the Naval Oil Reserve, policies that directed alternative fuel development for national defense interests have had to challenge newly discovered petroleum resources that presented clear economic advantages over alternative fuels.

And it concludes with a question we should well ask ourselves and anyone we know:   

An important policy question for Congress may be whether a domestic biofuel industry is necessary for national defense, and whether proceeding under the authority of the DPA offers the necessary stimulus. A domestic biofuel industry may satisfy concerns for a secure, domestic, alternative fuel source independent of unstable foreign petroleum suppliers. However, adding biofuel to the military's supply chain does not relieve logistical issues with delivering fuel to forward operating areas, where fuel supply issues have been more about vulnerability than availability.

Available as a E-Book from the link above, the report is much more reasonably priced than the 12-15% of DoD’s budget is directly related to the concern for oil in the Persian Gulf (2012 DoD budget (base+OCO) was $707B, with $85-$106B in annual expenditures that can be traced to our presence in the Gulf).  Even the $510M in Executive Branch money (not just DOD) is chicken feed as compared to the approximately 15-20% of the FY09 DOD budget that was used for protection of oil supply routes and infrastructure.  The average estimate of annual spending for US protection of maritime oil transit routes and oil infrastructure is $84B. For my Air Force who have said they will just wait until it comes down in price, I say, "take the plunge"!

So head out to the beach, slather on the sunscreen and cozy up to this titillating tome.  I am sure you won’t regret it!   Dan Nolan