Oil Shock

By John Liang / January 31, 2011 at 5:11 PM

The ongoing political unrest in Egypt and other North African and Middle Eastern countries has caused higher oil prices. This is just the latest nudge for the U.S. military to find alternative sources of energy to power its ships, aircraft and ground vehicles.

InsideDefense.com reported earlier this month that an influential Pentagon advisory board has been revisiting ways the Defense Department -- the nation's largest single fuel consumer -- might insulate itself from fuel-price volatility:

Specifically, the Defense Business Board will review whether the military should utilize contractual instruments available in commodity markets and used by commercial concerns, including airline and transportation companies, to try to stabilize fuel costs.

On Jan. 7, the chairman of the Defense Business Board, Michael Bayer, directed the formation of a new task force to examine the Pentagon's energy acquisition practices with a particular focus on options for hedging, returning to an issue the panel examined in 2003.

The panel, "Fuel Hedging Task Group," will be led by Denis Bovin, an investment banker and seasoned Pentagon consultant, and John O'Connor, a Defense Business Board consultant.

Bayer, in a Jan. 7 memo, directed the panel to "reexamine potential ways to reduce the department's exposure to fuel price volatility, including hedging in commercial markets."

Inside the Navy reports this week that the service is putting the finishing touches on a set of technical guidelines for the alternative fuels it will use to power its ships. The Navy is hoping to release the 350-page document to the public in the first half of this year, according to Gregory Toms, the expert who sets the standards for shipboard fuels at Naval Sea Systems Command. Specifically:

The release will come amidst an increasing push to meet the green energy goals set by Navy Secretary Ray Mabus in 2009 -- goals that are widely considered to be the most ambitious of all the services. By 2020, for example, the Navy is aiming to use alternative sources for half of its total energy consumption.

The Navy has focused much of its energy on bio-fuels -- fuels derived from organic materials ranging from plants to animals -- contracting 150,000 gallons of algae-derived ship fuel from the San Francisco-based alternative energy company Solazyme late last year. That order came on top of the 20,000 gallons the company had already delivered to the service in 2009.

But the petroleum-based fuel the Navy now uses for its aircraft and ships -- called JP-5 and F-76, respectively, needs to meet a complex set of requirements. JP-5, for example, has a significantly higher flashpoint than the fuel used by the Army and Air Force because of shipboard safety precautions.

Lots more military energy news being reported in Inside the Navy and Inside the Army this week, including:

Pentagon Policy Still Needed To Give Army Operational Energy Plans Teeth

Navy Attacks RAND Study Calling Biofuels Effort Commercially Unviable

Mabus: Aircraft, Ship Engines Need Industry Help To Run On All Biofuel