Military Oil: The Hunger for More

Luke Burgess

Updated March 6, 2006

Dear Wealth Daily Reader,

It’s difficult to hear about how much oil is consumed by the U.S. Department of Defense and not be shocked.

Now don’t get me wrong. These guys risk their lives daily to preserve our standard of living. But the US DoD doesn’t just protect America. It is the policemen that protects the shipping lanes for globalization all over the world.

And that’s why the DoD is the biggest consumer of petroleum in the U.S. and the single largest oil consuming division of government anywhere in the world.

In fact, if the Department of Defense was a country, it would be the 31st largest consumer of oil in the world! Thirty-second is Greece!

The amount of oil consumed by the U.S. military is truly nothing short of mind-boggling.

Hungry, Hungry Hippos

The Defense Department uses approximately 1.8 percent of the country’s total transportation fuel annually.

According to the U.S. Defense Energy Support Center (DESC), the branch of government that buys fuel for defense department needs, in 2004 the US military consumed an eye-popping 144 million barrels of oil.

That’s close to 400,000 barrels per day, or the same consumption of Greece! Even more surprising, the US Military consumes nearly 4X the amount of oil as New Zealand!

Of course in times of conflict the DoD would require more fuel. The U.S. Army calculated that it would need to use 40 million gallons of fuel in just three weeks of combat in Iraq.

This amount is equivalent to all of the gasoline consumed by all Allied armies combined during the four years of World War I!

Now none of this really comes as a surprise considering the types of vehicles used by the military.

A pair of Apache helicopter battalions, for example, can devour more than 60,000 gallons of fuel in a single night’s attack.

Another example – the Abrams Tank, which weighs 68 tons, is a true gas guzzler. This monstrosity only gets about a half mile to a gallon.

And you thought your Explorer had poor gas mileage.

The Apache and the Abrams are just two of the endless supply of aircraft, ground vehicles and ships the army has, and uses, at their disposal.

Footing the Bill

The U.S. military is also the biggest purchaser of oil in the world.

In fact, back in 1999 the DESC purchased more light refined petroleum products for the military, than any other single organization or country in the world.

In fiscal year 2005 it has been estimated that the DESC bought about 128 million barrels of fuel at a cost of $8.5 billion.

That’s enough fuel for the average car, getting 30 miles per gallon, to drive around the world 6,477,108 times!! (By the way, before you start to pack your bags for that trip, you have to know that if you drove 60mph, it would take you over 300,000 years to complete.)

In any case, the modern American GI is the most energy-consuming soldier ever seen on the field of war.

The U.S. military now uses about 1.7 million gallons of fuel a day in Iraq. So, each of the 130,000 soldiers on the ground consumes roughly 13 gallons of fuel a day.

What does it all mean?

During times of war you don’t have to own security stocks to make money. You can just as easily make a juicy profit with energy stocks.

The U.S. military uses about 30% more oil during times of war than during times of peace. The money and demand are almost guaranteed.

So, keep all this in mind just in case the U.S. decides that they’ve had enough of Iran’s antics and invades the country. While other investors scramble to buy defense and security stocks, you might be able to get a nice deal on a few energy stocks.

– Luke Burgess

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