US Military Fuel Costs Set To Soar

WASHINGTON — Consumers at the gas pump aren't the only ones suffering sticker shock. Military units in Iraq and elsewhere will see another hike in fuel costs next week, the second increase this budget year because of soaring oil prices.

On July 1, the cost for refined fuel used by troops will jump from $127.68 a barrel to $170.94 _ an astounding 34 percent increase in just six months and more than double what the Pentagon was paying three years ago.

While prices charged to warfighting units have fluctuated in recent years, they have not faced such a steep spike in so few months. The cost of jet fuel, for example, jumped from $2.31 a gallon in October, the start of the 2008 budget year, to $3.04 in December. As of next month, units will start paying $4.07 a gallon.

Pentagon spokesman Lt. Col. Brian Maka said Friday that the latest price hike is needed to cover an anticipated $1.2 billion rise in fuel costs in the next three months. While a $400 million a month increase in fuel costs won't affect ongoing military operations, it will require a "reprioritization of daily support activities," he said in an e-mailed statement.

It also will impact a federal budget already stretched thin by the wars in Iraq in Afghanistan. The U.S. is spending nearly $10 billion a month in Iraq and more than $2 billion a month in Afghanistan.

Sen. Susan Collins, a member of the Armed Services Committee, said the price increase makes the case that Iraq should start paying some of the military's fuel costs because of its hefty oil reserves.

Collins, R-Maine, and Democratic Sens. Ben Nelson of Nebraska and Evan Bayh of Indiana have proposed legislation that would require President Bush to negotiate with Baghdad on fuel subsidies for troops fighting in Iraq. The measure is included in a 2009 defense policy bill the Senate is expected to debate next month.

"The Iraqis continue to subsidize the fuel for their own citizens, but our troops, which are fighting side by side them, continue to pay top dollar," she said in a telephone interview on Friday.

Iraq owns some of the largest oil reservoirs in the world, although Baghdad has been unable to exploit much of the resource since the 2003 invasion because of high levels of violence and sectarian feuds over how to divide the revenues.

But because of a steady increase in output of crude oil in recent months and high market demand, U.S. officials estimate that Iraq revenues this year for oil will top some $70 billion _ twice what was initially anticipated when Baghdad prepared its 2008 budget.

If oil prices stay elevated as expected, the revenues would create a substantial surplus for Iraq at a time when Americans are facing an economic slump, aggravated by painfully high gas prices.

The situation has lawmakers upset that Iraq isn't covering more of the war's costs. This week, Congress sent President Bush a war spending bill that would pay for combat operations through the end of the year but require that Iraq match dollar for dollar any money spent by the U.S. to rebuild towns or equip security forces in Iraq.

While Bush is expected to sign the bill, administration officials have countered that Baghdad is already taking control. Earlier this month, U.S. Ambassador to Iraq Ryan Crocker declared in congressional testimony that "the era of U.S. major infrastructure projects is over."

Iraqi officials say if oil revenues do generate a surplus, they will revisit their 2008 budget to spend more of the money.

The U.S. military, through the Defense Logistics Agency's Defense Energy Support Center, buys fuel on the open market, paying from $1.99 a gallon to as much as $5.30 a gallon under contracts with private and government-owned oil companies. The center then sets a fixed rate for troops at the beginning of each budget year.

According to the center, every $1 increase in the market price per barrel translates into a $130 million rise in costs for the military because it relies so heavily on fuel. In Iraq alone, for example, the military consumes some 1.6 million gallons of fuel a day.

____

On the Net:

Defense Energy Support Center: http://www.desc.dla.mil

(This version CORRECTS the monthly increase to $400 million, sted $400,000.)

Comments

[Jason357]

I saw on CNBC where $12,000 could control $143,000 worth of oil. That might make sense if the person is actually going to buy that oil for an airline or something, but it makes no sense to let some rich guys buy and sell oil at that leverage and never have to take delivery of a single drop. If they can do that with oil, why not toilet paper? Let some jerk buy $100,000 of toilet paper for $10,000 and sell it to the highest bidder, without taking delivery of a single roll? Madness!!!

[KillTheMessenger]

They don't "control" oil. The trader has to sell that oil as soon as he actually "gets" it. Futures trading is not controlling anything. It's just mitigating risk for the seller at the potential profit of the trader. If the trader overestimates the market, he is, financially speaking, in the toilet.

I don't know why you call this madness.

Remember 1973? In 1973 the Saudis said that they won't sell ANY oil to US refiners. They could do that because most oil was directly traded from producer to refiner. With the market as a middle man that control is gone. Now they either sell their oil to the world or they don't sell it at all.

Your pick. I guess 1973 was better than today...

[chappelforpres]

One of the single biggest reasons oil costs what it does today. Can you imagine the mass inefficiencies of trying to air condition canvas tents, in the open desert, in the middle of July, using loans from the Chinese. Well, in a nutshell, that's Bush's energy policy .

[ubetchaiam]

"Collins, R-Maine, and Democratic Sens. Ben Nelson of Nebraska and Evan Bayh of Indiana have proposed legislation that would require President Bush to negotiate with Baghdad on fuel subsidies for troops fighting in Iraq. The measure is included in a 2009 defense policy bill the Senate is expected to debate next month.

"The Iraqis continue to subsidize the fuel for their own citizens, but our troops, which are fighting side by side them, continue to pay top dollar," she said in a telephone interview on Friday."

This statement by Collins just shows how poorly informed and disingenous our lawmakers are about what is going on in Iraq. Most Iraqi's can't get gasoline because of the lack of refining capabilities.

At the same time the lawmakers are screaming about the Iraqi's spending their own money to rebuild their country we destroyed with our bombs. And it was a neat trick by the Bush Admin to get the Iraqi's to have the U.N. specify U. S. 'assistance to the sovereign government' so the U.S. wouldn't be liable under Int'l law that proscribes the rebuilding as part of the responsibility as an 'occupying power'.

Add in the corruption that goes on in the Iraqi government sanctioned by the Bush Admin and Bin Laden's goal to bankrupt us is being achieved by the same U.S. 'leaders' who claim to be fighting 'terrorism'.

[Stephen]

The Pentagon is the worlds 'largest single consumer of petroleum products. End the occupations and free up a lot of oil.

The article differs from other information I have that says the major oil companies have contracts with the Pentagon but the price floats.

Check out "Coingate" on the Toledo Blade newspaper site for a micro example of how the G.O.P. operates: The Republicans made sweethear contracts with the party faithful. Those people then funneled illegal perks and campaign contributions back the politicians. Repeat as necessary to stay in power and enrich politicians and friends. But the good people of Ohio had enough and cleaned house. Maybe we will perform the same favor for the country in November.

[KillTheMessenger]

Pentagon makes up 1.6% of US oil consumption. Probably 1% of that is 1.6% used just for regular operations without any wars. If that is where you are looking for the missing oil, you are looking at the wrong place. Try V12 truck engine manifolds and you will have much better luck.

[JiminNC]

Sorry, if I was driving an armored Humvee with a 50 cal and four men with M16s, my gas would be free.

[nanotubz]

Looks like the war funding just passed won't last as long as planned, and if oil goes to $170 per barrel, even shorted still. This is getting more interesting by the price jump.

[Jason357]

Np problem, Pelosi's probably already at work to make sure they get more $$$ for the war that she's supposedly against.

[ricchase]

Only George Bush could invade a country for oil.....and not get any.

[NotMcCain]

Another reason I'm a big fan of Wes Clark. Even knowing how Bill Clinton regards members of the Democratic party like a Mafia chieftain ("you're with me or the enemy"), he still made his support for Obama clear and powerful.

Clark as VP would be beyond reproach by either Hillary or Bill. And he might, at some point, be able to bring Bill on board without the repulsive necessity of Barack flattering him any more than he already (very nicely) has.

Clark showed a lot of guts standing with Obama so fast, realizing how angry and BITTER Bill is. Going public so soon, as a visible Obama surrogate (and making powerful points against McCain's PR machine) couldn't have been easy.

Obama/Clark '08

[helonias]

The Iraqi's are merely emulating Haliburton and KBR.

Wonder why it took so long, its their oil,

[1differentdrummer]

Can someone tell me why the services don't have long range contracts with guaranteed prices? Someone should go to jail.

[OgreDaddy]

I would just LOVE to see an accurate pie chart showing how much money for " Our Troops"
actually is going to "Our Troops", you know the guys with boots on the ground, the guys risking life and limb for a manufactured war.

How much is going to contractors and for what?
How much is going for big weaponry vs. actual
troop reinforcement and supplies.

The Bush administration double speak is chilling.

[Y2KCockroach]

Thank Gawd that the Bush administration and Congress issued the Pentagon a Chinese credit card so that they could "pay" for these increases.

[IneptitudePrideB4Fall]

Iraq should pay NOTHING!!! to us for our despicable attack on that hapless, helpless country. What a colossal nerve we have. We attack a country that never was a danger to us, we demolish the country, we murder hundreds of thousands of its citizens, we displace millions of its people, and now we want them to PAY money FOR IT! The only good that might have come from the very high petroleum costs is (my hoped-for) our departure from the MidEast. But now those Crazies in DC want Iraq to pay for its own destruction. Well, if Iraq refuses to pay us to destroy that Cradle of Civilization, we will just bomb them some more. Then we'll demand that they pay even more for our additional demolitions. What EVIL!


We, the American taxpayers, should have punitive damages assessed to us for all the carnage and misery we have inflicted on those poor, miserable Iraqis.

!!!!!!!!

[fcsakes]

Consumers ARE the Army! We fund everything so let's not cry any crocodile tears over getting screwed for gas prices in Iraq.

Just get the hell out of Iraq - we never had any business in Iraq, but the prez and his co-conspirators are never going to spend one second in prison where they belong, they are never going to have to repay the trillions they have stolen from our lifetimes and our children's and our grandchildren's lifetimes, they are never going to pay for the thousands of American lives lost in this war, or the 10's of thousands of maimed soldiers, or the 100's of thousands of dead, destroyed, lost Iraqi's.

They are going to get away totally whitewashed. If I had anything left to puke up, I would wrap it in a box and mail it to the sons-of-bit*hes.

[frantaylor]

Does anyone have a revised estimate of the cost of this war, based on these new fuel costs? What will be the final price tag when we achieve this 'victory' the Republicans talk about? How much oil will be expended and how much oil will we get? Compute the cost of the oil we will end up with, adding in the war costs. Compare this to what we could have achieved through conservation efforts instead. Will you still say that it was 'worth it'?

[IneptitudePrideB4Fall]

I did post a comment a looong time ago. Where is my comment?

????