Rising Oil Prices Pushing Large Consumers to Shift to Alternative Fuels

With no relief from high oil prices in sight, large institutional transportation fuel consumers are shifting to alternatives. From the Department of Defense, to the airline industry, to Fed Ex, the security of fuel supplies and price stability are key to accomplishing their missions in the future.

The U.S. Energy Information Administration (EIA) reported this week that spot crude oil prices are at a 12-month high. Prices have been driven up in recent months by surging global demand and mounting concerns for the future security of a significant portion of the global oil supply chain which is transported through the Persian Gulf. The Senate Committee on Energy and Natural Resources received testimony on the factors driving the increase in transportation fuel prices on March 29. Find the testimony and video of the hearing here .

The Department of Defense (DOD) is the largest institutional consumer of transportation fuel in the United States, accounting for almost two percent of U.S. petroleum demand. Every $1 per barrel increase in the cost of petroleum costs the Navy, alone, $30 million additional per year. The DOD has identified reducing oil dependence to be a strategic necessity. Converting to biofuels is a core part of this strategy. The Biomass Coordinating Council (ACORE) held a webinar exploring these issues on April 4. Speakers included representatives from the Carbon War Room, the U.S. Department of the Navy, Sturman Industries, and Honeywell UOP. The presentations are available here .

The airline industry is driven by similar concerns, as described in our SBFF post February 10 .

Finally, on April 2, NPR reported that Fed Ex is increasingly taking steps to shift its air and ground fleets to alternative biofuels, battery power, and compressed or liquid natural gas. Today, Fed Ex consumes about 1.6 billion gallons per year of transportation fuels.