DoD Makes Coal Into Jet Fuel

The US Department of Defense is seeking investors to help them implement techniques to convert coal into fuels useable in jet aircraft and other vehicles in the DoD inventory. The US Air Force alone consumes 80 million barrels of oil a year, 50% of all DoD fuel usage. The DoD fuel bill accounts for $7.4 billion a year out of the defense budget, the largest expendable item on the budget. Coal Liquefaction technology has been around for nearly 80 years, but $60 a barrel oil is beginning to make the technology more attractive commerically, despite the $5 billion estimated price tag to build the required plant to do it.

The fuel costs are not the Defense Department’s primary motive here, however. They are concerned about the vulnerability and volatility of petroleum supplies and are trying to mitigate the risk of attacks on refineries in the US, which are famously at maximum capacity since Hurricane Katrina. In other news, the US Navy is the leading consumer of bio-diesel and the US Air Force is the biggest user of wind energy. Will oil producers drop the price to make them an offer they can’t refuse? Is this a threat to other alternative fuels, or is it best for security to have diverse sources of fuel?

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