The Pandemic Depression
The Global Economy Will Never Be the Same
In the immediate aftermath of World War II, the U.S. naval aviator Thomas Moorer questioned Takeo Kurita, a former vice admiral of the Imperial Japanese Navy, as part of the U.S. military’s postwar interrogation of Japanese commanders. Kurita told Moorer that one of the most significant reversals of fortune Japan had suffered during the war was the loss of fuel supplies. “We ran out of oil,” Kurita said, and by the end of the war, the Japanese military had grown so desperate, it was operating its equipment on fuel distilled from old tires, rice, and even pine needles. “What I learned then,” Moorer would note years later, “was never lose a war, and the way to lose a war is to run out of oil.”
Last year, the U.S. Department of Defense was the single largest consumer of fuel in the United States, using about 90 million barrels of oil, at a cost of nearly $15 billion. The fuel requirements of the U.S. armed forces accounted for approximately 1.3 percent of all U.S. petroleum demand and more than 80 percent of the federal government’s total fuel consumption.
Although the United States is not in any immediate danger of running out of oil today, the U.S. military’s heavy reliance on fuel could become a liability, given that U.S. forces must be able to travel long distances on short notice. And President Barack Obama’s rebalancing of U.S. strategic interests to the Asia-Pacific region only further underscores the importance of U.S. mobility.
The U.S. military’s fuel demands may not seem problematic today. But they will be in a future in which a range of potential adversaries could target supply lines with precision, thanks to advanced weapons. To confront that risk, the Pentagon hopes to transform the U.S. military from an organization that uses as much fuel as it can get to one that uses only as much as it needs. It plans to build a force that requires less energy to operate and can adapt its use of various energy supplies and technologies to fit the needs of different contingencies and campaigns. The Pentagon still has a long way to go before it can realize these goals. But from bases in Afghanistan that have cut their energy use by a quarter to the development of more efficient engines, the U.S. military has already begun improving its energy security in ways that make economic, environmental, and strategic sense. The stakes are also high for the civilian economy. The International Energy Agency has estimated that the world will need to invest some $37 trillion in new energy technologies by 2030 in order to meet rising global demand. Therefore, a more energy-efficient U.S. military may well help drive the innovation so urgently needed in the civilian economy, too.
NEVER BREAK THE CHAIN
Since the birth of the petrochemical industry in the mid-nineteenth century, fuel has fed victory -- and defeat -- in war. “At the present time, my chief difficulty is not the Germans but gasoline,” General George Patton wrote in August 1944, as fuel shortages at the front limited the U.S. Third Army’s advance into Germany. “If I could only steal some gas, I could win this war.”
Today, U.S. forces in Afghanistan have few such complaints, thanks to the long reach of U.S. military logistics and the Pentagon’s well-honed ability to secure energy supplies on the international market. But getting fuel supplies to the battlefield still carries significant risks. Consider Combat Outpost Jaghato, south of Kabul, one of hundreds of small U.S. bases throughout Afghanistan. Before the camp closed last year, it housed nearly 100 soldiers. They carried out most of their combat and training missions on foot but still went through an average of about 500 gallons of fuel every day to run armored vehicles and generators, which provided electricity for, among other things, computers, lights, and heaters.
Given the difficult, dangerous terrain that surrounded the outpost, most of Jaghato’s fuel arrived via twice-monthly aircraft deliveries. According to the Pentagon’s analysis, moving fuel by air to such remote positions takes about two gallons of fuel for every gallon supplied. Counting transportation and protection requirements, a gallon of fuel for outposts such as Jaghato has an effective cost of roughly $40.
But not every combat outpost in Afghanistan has its fuel delivered this way. Other locations are supplied by truck from the Pakistani port of Karachi and then overland through Pakistan. This method of delivery is generally cheaper than sending fuel by air, depending on the route and the escort requirements, but in some cases, it exposes the supplies and personnel to a significant risk of attack by the Taliban and other groups on both sides of the Afghan-Pakistani border. Thousands of Afghan, Pakistani, U.S., and NATO military and civilian personnel in Afghanistan and Pakistan have been killed or wounded by improvised explosive devices, suicide bombings, or ambushes while clearing routes and escorting or moving ground convoys, some 70 percent of which are typically ferrying fuel and water supplies, according to the U.S. Army.
Although any battlefield involves such risks and expenses, the 2014 Quadrennial Defense Review, the Pentagon’s signature strategy document, foresees a future of more attacks designed to interfere with the free movement of U.S. forces. Indeed, such attacks -- what the Pentagon calls “anti-access/area-denial” tactics -- have already been a cause for concern for both military and commercial interests, from the improvised explosive devices in Afghanistan to sea mines in the Strait of Hormuz and piracy off the Horn of Africa. And according to a 2012 report by General Martin Dempsey, chairman of the Joint Chiefs of Staff, new, technologically sophisticated weapons, such as precision-guided mortars and missiles, antisatellite weapons, and unmanned aerial, ground, and underwater vehicles, are making these tactics even more dangerous. The report noted that logistics will certainly be a target for adversaries wielding such weapons, and U.S. forces’ appetite for fossil fuels and electricity will be a particular vulnerability.
Energy supply and demand trends are part of this changing geostrategic picture, as well, but in ways that can be hard to predict. Domestically, recent improvements in energy efficiency and oil and gas production are good news for the U.S. economy -- for the balance of trade, job growth, and the manufacturing sector. But there are also secondary, emerging geopolitical effects. For example, the U.S. Energy Information Administration has forecast that China will become the world’s largest oil importer this year. Although China and the United States will both continue to benefit from a calm global oil market and freedom of movement through the Strait of Hormuz and other chokepoints, China’s import dependence is rising as the United States’ is falling sharply. China’s increased direct trade with energy-producing nations, such as Russia, Saudi Arabia, and perhaps even Iran, will shape the strategic interests of all countries. At the same time, all these nations are developing their own anti-access/area-denial capabilities to target supply lines and limit the movements of adversaries. For now, these shifting energy relationships and defense investments do not threaten U.S. economic or security interests. But the Pentagon is watching these trends closely.
EVERY LITTLE BIT HELPS
The U.S. military will always need energy, and supply lines are always attractive targets during times of war. One way to limit the military’s vulnerability would be simply to use less fuel -- to reduce risk by reducing reliance. To that end, the Pentagon plans to invest $9 billion over the next five years to boost the efficiency and protect the energy supplies of U.S. military equipment. Almost 90 percent of these funds will go toward reducing the demand for fuel in combat, mostly by improving the efficiency of everything from battleships to fighter jets.
The remaining ten percent of the Pentagon’s energy investment will be aimed at diversifying its fuel supplies and making them more reliable. That includes testing and evaluating advanced fuels for use in military equipment. The Pentagon has already certified for use blends of fuel made from petroleum mixed with coal, natural gas, or renewable biomass, which means that U.S. forces will be able to buy such fuel on the commercial market in the future. These investments will also support a larger national goal to develop domestic low-carbon liquid fuels.
The Pentagon is already applying energy innovations in the field. Since 2012, a U.S. Army program known as Operation Dynamo has supplied about 70 U.S. bases and outposts in Afghanistan, including Jaghato, with more energy-efficient generators, shelters, and lighting, as well as improved energy-storage and electricity-distribution equipment. At Jaghato, the upgrades cut the outpost’s total fuel demand by a quarter, allowing the military to make an estimated 45 fewer air deliveries of fuel over the course of a year.
Given that the Department of Defense consumed more than four billion gallons of fuel last year, saving 125 gallons a day at Jaghato may seem like a drop in the barrel. But it is an important drop: even a small savings at the edge of a battlefield can make a big difference for the soldiers serving there and for all of those who supply them with fuel. But still, outposts such as Jaghato are not significant overall consumers of fuel when compared to ships, planes, and combat vehicles. And although the Pentagon’s investments in efficiency could similarly reduce the energy needs of that equipment down the road, for the time being, the U.S. military’s energy consumption is growing, and quickly. That spike is the result of equipment that the Pentagon plans to introduce in the next few years, which, although technologically advanced, will increase the U.S. military’s fuel demand. The F-35 combat aircraft, the Littoral Combat Ship, and the KC-46A tanker aircraft, for example, will all consume more fuel than the platforms they will replace, contributing to a projected rise in the Pentagon’s fuel demand of at least ten percent by 2020.
These changes may not bode well for the Pentagon’s energy use in the short term, but some encouraging signs are emerging. One project, the Adaptive Engine Technology Development program, promises to make a fighter jet engine that uses 25 percent less fuel, which could mean an increased strike radius, fewer refueling missions, and lower operating costs. The Department of Defense is developing a flexible, wearable battery that would conform to soldiers’ body armor. Along with the Department of Energy, it is also working on developing “hybrid energy storage modules,” which include a variety of improved energy-storage devices for military use. A number of research projects are under way on “tactical microgrids,” which control and optimize the distribution of electricity on the battlefield to improve the reliability of generators and reduce their wear and tear. Meanwhile, lighter-weight, lower-drag materials have the potential to improve the energy performance of everything from bullets to vehicles to airplanes. Investments in other technologies could tap localized or renewable energy supplies, such as waste products, portable solar cells, and even the kinetic energy troops generate when they walk.
Ultimately, however, an energy footprint that is light enough to make a difference in future conflicts will require more significant changes, which may mean entirely different platforms. Unmanned systems, for example, tend to use less fuel than manned systems, and there can be more flexibility in how to fuel them. The Pentagon has been testing fuel cells and solar cells for such uses, which could greatly extend the range of unmanned aerial vehicles and make them less detectable.
The Pentagon’s demand for energy is a problem in its own right, but it is also a symptom of a larger issue: a military force with such a high energy demand generally is a heavy military force, which is expensive to acquire, operate, and maintain. Although there is considerable ambiguity about the dangers the United States might face in the future, a clash of large mechanized forces -- tanks, fighter aircraft, battleships -- seems unlikely for now. So U.S. forces need to prepare for a different threat environment -- and not just for the sake of energy security.
THE BEST DEFENSE
The benefits of the Pentagon’s drive for energy efficiency go well beyond improving the U.S military’s energy security and lowering its costs. Through coordination and technology transfers with the private sector, the effort to create a more energy-efficient and secure fighting force could also stimulate innovation beyond the military and help reduce the carbon footprint of many businesses. Some of the world’s most important technologies, from semiconductors to the Internet, have resulted from collaboration between the U.S. military and private industry, and the U.S. energy sector will likely benefit from that pattern, as well.
Mail delivery services, commercial airlines, and large retailers face logistical challenges of their own and rank among the largest fuel consumers in the United States. Fuel costs accounted for 30 percent of United Airlines’ budget and 11 percent of FedEx’s in 2013. Numbers such as those have driven many firms to improve their energy efficiency and diversify their fuel options for the sake of their bottom lines. They would benefit greatly if the U.S. military shared its energy innovations with them; the Pentagon will make every reasonable effort to do so.
For now, the well-being of every American depends on reliable, steady access to fossil fuels. But down the road, economic and environmental pressures will make energy efficiency and cleaner energy urgent priorities. The Pentagon’s investments in energy efficiency and renewable sources will primarily benefit its core mission, but they also have the potential to contribute to improving energy efficiency and cutting down on fossil fuel consumption across the United States. In that way, as the Pentagon pursues smarter energy policies in order to build a stronger military force, this may well mean better national security, too.