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Source link: http://archive.mises.org/21383/oil-and-the-pentagon/

Oil and the Pentagon

March 8, 2012 by

Late last month, Bloomberg reported that British Petroleum continues to experience substantial growth in the amount of money it receives from the Pentagon for its oil services. From 2010 to 2011, Pentagon contracts with BP increased by one-third from about 1 billion to 1.35 billion.

This was presented by some in the media as a scandal, since presumably, BP should be punished by the Pentagon for it’s massive 2010 oil spill in the Gulf of Mexico. The larger story, however, should be about just how much the Pentagon spends on oil every year.

The BP contracts are just one small portion of total Pentagon spending on oil, and as Bloomberg reported earlier in February, Pentagon spending on oil surged 26 percent from 2010 to 2011, rising from $13.7 billion to $17.3 billion during that period. That’s about 117 million barrels of oil.

Indeed, the U.S. Department of Defense is the largest purchaser of oil on earth, and reportedly consumes more than any other governmental department or body worldwide. Obviously, the effect of such a huge driver of global demand on the global oil price certainly isn’t zero.

There have been talks in Washington of cutting the military’s budget by about 500 billion over the next ten years. In spite of the fact that this amount is laughably small, the military is claiming that the global oil price, which the military itself is pushing up, will make even a tiny reduction difficult.

We can consider this along side the much ballyhooed effort by the Pentagon to “go green” and slash its use of fossil fuels. It also promises to cut greenhouse gas emissions by ten percent. This cut, however,

exempts the military’s bases in Iraq and Afghanistan, as well as the jets, ships, and ground vehicles that swallow up 75 percent of the military’s fuel supply.

So, the Pentagon will be cutting emissions except when it’s not. And by cutting its reliance on fossil fuels, it can presumably get to work driving up the price of non-fossil fuels. Whether or not the reduction of fossil fuel use and greenhouse gas emissions should be a goal of public policy is debatable, but in typical fashion, the reality of the effort to “go green” hardly matches the PR.

The idea of the Pentagon becoming environmentally conscious is itself somewhat ridiculous. Governments worldwide have committed some of the worst environmental disasters in history, and government militaries tend to be among the worst perpetrators. Civilian functions of government can be environmentally disastrous, as in the case of the Soviets and the Aral Sea, but governmental war efforts seem to produce the lion’s share of the damage done. Even leaving aside all the fire bombing and the nuclear bombs and the depleted uranium bombs still being used by the Pentagon, we’re left with nuclear test sites, the myriad of polluted weapons production sites, such as Rocky Flats and the non-stop use of oil that is necessary to move around machines of war day in and day out across the globe. The U.S., for example, has essentially been at war nonstop since 1990. That sort of thing gets expensive in both budgetary outlays and in environmental impact.

American taxpayers aren’t just paying once for the Pentagon’s spending spree on oil. They’re also paying through higher prices at the pump. Worldwide, private citizens continue to pay for government militaries through lost limbs thanks to leftover land mines, or polluted soil and groundwater due to depleted uranium, through unexploded munitions, or through just old-fashioned air pollution.

Yet governments continue to lecture private citizens for the crime of driving an automobile to the grocery store or failing to recycle a few aluminum cans.

Note: See Rothbard on air pollution.

{ 7 comments }

P.M.Lawrence March 9, 2012 at 6:24 pm

The idea of the Pentagon becoming environmentally conscious is itself somewhat ridiculous.

Yes – but what it is really trying to do is actually quite sensible. It’s just that if the PR is claiming that it is lying, and if people are merely jumping to that conclusion they don’t know what they are talking about.

What the Pentagon is really trying to do is avoid logistical bottlenecks that could cause difficulties and reduce capabilities and options in troubled times, let alone outright war: the sort of thing that Japan suffered from the U.S. oil embargo in 1941. If liquid fuels can be produced locally, even if uneconomically, imports and centralised national production cease to be choke points; if Japan had set up enough diesel tree plantations in 1931 in southern Taiwan (where they can grow and where the locals were available to exploit), it wouldn’t have had that problem in 1941. But that sort of alternative takes a lot of lead time and set up work, so what the Pentagon is doing is carrying out pilot studies, to be ready ahead of plausible crises the way Japan wasn’t. If the studies don’t work out, say from the methods being highly uneconomic, it would make more sense to increase and decentralise strategic oil reserves, but even if the methods turn out to cost a lot more than conventional fuel supplies it would be worth having them ready to start at short notice because the crises would cause bottlenecks and change the pricing structure and cost benefits.

nate-m March 10, 2012 at 6:38 am

I think you out-clevered yourself here.

The first problem to your hypothesis is that the USA has very substantial oil reserves. As a domestic producer of oil the USA could meet it’s oil demand easily in a time of war using traditional methods of extracting it from the ground.

The second problem is that biodiesel is not really a sustainable source of energy. The Japanese had no chance of meeting it’s need with the ‘diesel tree’, for example. I t would of never worked. Even using modern technology and techniques to produce biodiesel it is still largely is a net energy loss. It costs more energy to produce biodiesel then what you get out of it. It’s not economical, it’s inefficient. Which ultimately means that if we had to go to war and the DoD tried to leverage biodiesel to compensate for the lack of imported oil then it would more then likely make the problem of lack of oil worse, faster. So this means that if the Pentagon is thinking that biodiesel represents some sort of strategic oil reserve then they are morons.

So, no. This is not some clever attempt at securing a source of oil in potential bad times while masquerading as “being green”. What it is is just politics as usual…

It is just another obvious example of lying thieving bastards running the government and military using government subsidies in a shallow, cynical, and fully self-aware attempt to curry favor among both government-dependent Midwest farmers and Greenie-types that suffer from a critical underabundence of reasoning skills and basic scientific knowledge.

P.M.Lawrence March 10, 2012 at 8:09 am

No, I did not “out-clever” myself, and it’s no hypothesis (it’s documented, if you look deeply enough – I think murdoconline looked into it a while back). You were just jumping to the faulty conclusion that I was speculating. Also, you didn’t look at what I wrote, which covered both importing problems and the problems of centralisation; U.S. domestic oil production has little (but some) bearing on the logistical problem of getting fuel to everywhere it might be needed. What the researchers are doing, which is sensible, is studying the issue – which is not the same thing as committing to biofuel sight unseen. I have no doubt that, if this R&D comes right, the final policy will be a belt-and-braces one using both this and sourcing strategic reserves by conventional means.

As to Japan, actually, it could have either beaten the embargo or at least stretched out its position the way I described (and it would have been even better if it had set up its alternatives even earlier, to get full maturity in the plantations). That particular method does not cost “more energy to produce biodiesel then [sic] what you get out of it” (it’s labour intensive instead – but hey, that’s what exploiting the natives is for), and even if Japan had used the methods that do, that’s not the issue; what counts is the form in which the energy is available. For instance, it made sense for Germany to synthesise oil from coal during the Second World War, even though that takes far more energy than emerges in the oil – because you can use oil products in a tank, a submarine, an aeroplane, or a warship of the period, but you can’t do that with coal. And, of course, Germany also got as much conventional oil as it could from areas it did control.

nate-m March 10, 2012 at 9:25 am

Also, you didn’t look at what I wrote, which covered both importing problems and the problems of centralisation; U.S. domestic oil production has little (but some) bearing on the logistical problem of getting fuel to everywhere it might be needed.

Sorry for doubting you, but in what way does biodiesal production has the potential to solve refining and transport issues during a major world wide war that having vast petroleum resources at hand, right under our feet domestically, does not?

As to Japan, actually, it could have either beaten the embargo or at least stretched out its position the way I described

I don’t think so. Getting in to war with us was already a act of desperation on their part due to our oil embargo. If planting some trees and enslaving Koreans would of had the potential to solve their problems then I really doubt that they would of tried to attack the USA.

For instance, it made sense for Germany to synthesise oil from coal during the Second World War, even though that takes far more energy than emerges in the oil

Right. Germans had lots and lots of coal, but not very much oil. So it made sense. We have lots and lots of oil and lots and lots of coal locally and abroad. Probably enough in just a small area in Texas or Alaska to sustain a major military effort for hundreds of years.

What the researchers are doing, which is sensible, is studying the issue – which is not the same thing as committing to biofuel sight unseen.

Biodiesal is not a new technology. There isn’t much there that is secret and if anybody is going to find magic breakthroughs it’s not going to be the military. It just does not make sense to invest in something that costs more energy to produce then you get out of. Especially when the only purpose to replace something we already have a lot of, even if we got cut off 100% from foreign supplies.

It is like using a battery powered battery charger. It just makes the problems you already have worse. They can use whatever excuse they want, but the whole goal is just to spend money. That’s all they know how to get right.

P.M.Lawrence March 12, 2012 at 8:48 am

Sorry for doubting you, but in what way does biodiesal [sic] production has the potential to solve refining and transport issues during a major world wide war that having vast petroleum resources at hand, right under our feet domestically, does not?

First, those aren’t the alternatives. The alternatives are, only having the oil resources versus having both the oil resources and biofuel resources (and you really shouldn’t keep making that bait and switch to biodiesel – it’s a range of different biofuels over and above that).

Second, oil resources under your feet are worthless unless that’s where the need is (there isn’t any near Pearl Harbor, for instance) and also you have secure refining facilities near there (Rockefeller’s greatest innovation was in creating the modern oil industry by vertically integrating what had been three quite distinct industries, oil extraction, oil refining, and petroleum products distribution, something in which he succeeded so well that many people – including you – have forgotten that you need all three). Biofuels such as biodiesel (but not only that) can be made almost anywhere with little in the way of plant from widely available materials; the processes cost in terms of material inputs and labour instead, and usually have small physical limits to how much of those are available (the diesel or kerosene tree method delivers far more, but is only suitable in certain areas and has a long lead time, making its constraints more like those of conventional oil). The important point is, those are different constraints to those faced by the conventional oil industry, so having both makes strategic adequacy much more secure.

Getting in to war with us was already a act of desperation on [Japan's] part due to our oil embargo. If planting some trees and enslaving Koreans would of [sic] had the potential to solve their problems then I really doubt that they would of [sic] tried to attack the USA.

You have wilfully, recklessly or negligently missed what I was telling you completely:-

- It would have taken a lot more than “planting some trees”, it would have [that's how it's spelled] needed vast numbers of trees.

- Planting trees isn’t enough, they have to be planted at least ten years ahead of time, and better still fifteen or twenty. I wasn’t claiming that the Japanese had a realistic alternative once the oil embargo hit, just that this sort of thing would have helped if only it had been ready far enough in advance – which is why the current studies are sensible now, when there isn’t a visible need already there.

- Enslaving Koreans wouldn’t have helped that effort at all. The only way to have made it work would have been, to exploit the locals in the securely Japanese controlled area that was large enough and was where those trees could grow, which as I told you was southern Taiwan.

Germans had lots and lots of coal, but not very much oil. So it made sense. We have lots and lots of oil and lots and lots of coal locally and abroad. Probably enough in just a small area in Texas or Alaska to sustain a major military effort for hundreds of years.

Probably not, unless you can somehow arrange for all the hostilities to happen there – but then, production could get disrupted there. So it makes sense to have alternatives that don’t have that sort of constraint. That is, it makes sense to be able to get fuel to wherever the needs are, from nearby sources that aren’t particularly prone to disruption.

Biodiesal [sic] is not a new technology. There isn’t much there that is secret and if anybody is going to find magic breakthroughs it’s not going to be the military.

There’s that bait and switch again. On the one hand, breakthroughs don’t have to be magic, and on the other hand most of the work isn’t being done on biodiesel anyway (references I made to that are by way of illustration, and are not exhaustive).

It just does not make sense to invest in something that costs more energy to produce then you get out of.

Not only have I already shown you why that is the wrong test to use, you have already conceded that in relation to the example I gave to illustrate that – German wartime synthesis of oil from coal. Furthermore, you have wilfully, recklessly or negligently overlooked the fact that not all the possible approaches suffer from that particular defect, which I illustrated with an example that you also showed that you read – the diesel (or kerosene) tree.

nate-m March 12, 2012 at 10:12 pm

First, those aren’t the alternatives. The alternatives are, only having the oil resources versus having both the oil resources and biofuel resources (and you really shouldn’t keep making that bait and switch to biodiesel – it’s a range of different biofuels over and above that).

Biodiesel is probably really the only one that matters since the military has standardized on diesel fuel for pretty much everything. Ships, trains, trucks, tanks, etc etc. They all run diesel.

Second, oil resources under your feet are worthless unless that’s where the need is (there isn’t any near Pearl Harbor, for instance) and also you have secure refining facilities near there (Rockefeller’s greatest innovation was in creating the modern oil industry by vertically integrating what had been three quite distinct industries, oil extraction, oil refining, and petroleum products distribution, something in which he succeeded so well that many people – including you – have forgotten that you need all three).

No, I have not forgotten that. _THAT_ is exactly why it’s so damn obvious that it’s so damn stupid. FFS.

That’s why I was asking you tell me in what way do ‘bio fuels’ solve logistical problems for the military that increasing domestic oil production can’t.

The problem, in a conflict, is NOT going to be finding a source of oil energy. The problem is one of transport and refining. And that’s exactly the problem that ‘bio fuels’ do nothing to solve. The military is not going to be able to farm out vast fields of tractable land and flatten out country sides in order to create the necessary sources of green stuff they need in order to have a reliable source of fuel. They are not going to be able to build refineries on the spot or anything like that near conflict areas. The idea that somehow that farms and farmland (or kelp beds, vats of bacteria, or whatever the hell else your imagining) in foreign countries and nearer conflict zones along with the large scale industrial facilities needed to process such material are going to be more robust and not easily disrupted compared to domestic oil production is ludicrous.

I mean you are really jumping through hoops here. The whole thing is just patently silly.

Why do you have such a hard time accepting the reality that the military is just engaging in graft and waste for the sake of politics? This sort of activity is nothing new for our military. In fact spending money for political ends is practically the core mission. Politicians use military spending from day-one as source of massive ‘pork’ for various communities and favored corporations and the military is perfectly consent to play along as long as they can get the extra money for whatever they want to do.

P.M.Lawrence March 14, 2012 at 11:00 pm

I’m starting again, since the reply levels have run out.

Biodiesel is probably really the only one that matters since the military has standardized on diesel fuel for pretty much everything.

Wrong. Gas turbines don’t use that. On the other hand, fuel for those can be used in diesels (you don’t have to standardise in the sense of fuel choice). That is why the pilot studies are looking into jet fuel substitutes. Recent trial flights tested that. Oh, and it isn’t military vehicles alone that count here; today’s supply routes through Pakistan mostly use contractors.

Of my “Rockefeller’s greatest innovation was in creating the modern oil industry by vertically integrating what had been three quite distinct industries, oil extraction, oil refining, and petroleum products distribution, something in which he succeeded so well that many people – including you – have forgotten that you need all three”, you assert:-

No, I have not forgotten that. _THAT_ is exactly why it’s so damn obvious that it’s so damn stupid. FFS.

Your forgetting that is the charitable assumption. Otherwise, your emphasising that having oil under foot was what mattered is disingenuous. If you know that it is not what matters, you are obfuscating.

That’s why I was asking you tell me in what way do ‘bio fuels’ solve logistical problems for the military that increasing domestic oil production can’t.

Well then, you probably noticed that I answered this. But maybe not…

The problem, in a conflict, is NOT going to be finding a source of oil energy. The problem is one of transport and refining. And that’s exactly the problem that ‘bio fuels’ do nothing to solve.

Actually, they do, since (as I already pointed out) the feedstocks are widely available in small quantities in most areas and the processing need not involve significant set up. That means that they can be prepared nearby, and as far as this point goes the only issue is keeping production up. Of which…

The military is not going to be able to farm out vast fields of tractable land and flatten out country sides in order to create the necessary sources of green stuff they need in order to have a reliable source of fuel. They are not going to be able to build refineries on the spot or anything like that near conflict areas.

They do not need to do those things. All they need to do is have first crack at what the local population would have taken and undertake minor processing (no refineries are needed, merely simple equipment).

No, the problem isn’t the military being able to get what it wants; it could do that even with current methods. The problem is not having enough left for other people.

The idea that somehow that farms and farmland (or kelp beds, vats of bacteria, or whatever the hell else your imagining) in foreign countries and nearer conflict zones along with the large scale industrial facilities needed to process such material are going to be more robust and not easily disrupted compared to domestic oil production is ludicrous.

Yes, it is ludicrous. Don’t make it up.

The whole point of the pilot studies is to find out if there are any ways of achieving the desired results without those non-solutions and without adverse side effects for other people. Well, it is already possible to get the former.

By the way, farm production of biofuel in foreign countries plus fuel transport from there to nearby combat zones is harder to disrupt than conventional oil production and refining (whether in the U.S.A. or nearer) plus fuel transport from there to distant combat zones. That is already showing up in Afghanistan, and it could have been learned from other people’s experience in earlier wars. You’re overlooking the logistics again, though since you don’t like that I won’t be so charitable as to call it forgetting this time.

Why do you have such a hard time accepting the reality that the military is just engaging in graft and waste for the sake of politics? This sort of activity is nothing new for our military. In fact spending money for political ends is practically the core mission. Politicians use military spending from day-one as source of massive ‘pork’ for various communities and favored corporations and the military is perfectly consent to play along as long as they can get the extra money for whatever they want to do.

Hold it. You are building in your own assumptions. Even if “they” (or at least the more political of the animals) want to do that, the fact remains that we aren’t looking at that in these comments, we are looking at pilot studies. Here’s the breakdown:-

- If military biofuel went ahead right now, it could quite possibly be for mixed motives, with some going for it because of the operational reasons that others were just using as a cover.

- Pilot studies are all that is happening right now. I pointed out that there were sound reasons for doing those, because they might lead to other worthwhile things and there was a cost effectiveness to the enquiry. This remains true even if some of those involved have ulterior (and inferior) motives.

- If the studies come right, it would be worth second sourcing some of the fuel supply to biofuels, because of the different pattern of bottlenecks to conventional fuels if nothing else. But it just might turn out to be worth it regardless (I am not claiming that for current methods, and arguing that those currently don’t deliver does not rebut this.)

- If and only if the studies don’t come right and the military goes for the wrong sort of biofuel supply anyway, i.e. with adverse effects for other people who would lose out on food etc., then and only then would it be worth rejecting on some of the grounds you give (not on the grounds that don’t fit, like needing massive refineries or needing vastly more energy inputs than yields – those only come from faulty agriculture distorted by subsidies etc., not from biofuels). But it hasn’t come to that yet, and it is only necessary to reserve judgment. That doesn’t rule out pilot studies.

So just who really is jumping through hoops here, and just what is patently silly? There is nothing silly about finding out cost effectively before it gets too late to matter. And that is all that I have been trying to point out.

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