Estimating the fully burdened cost of fuel using an input-ouput model - a micro-level analysis

Abstract

In 2010, the Defense (DoD) spent $1 3.2 billion on fuel purchases, with over 3,000 lives lost in fuel delivery operations between 2003 and 2007. To reduce both of these figures, the DoD is investing in technology to reduce fuel consumption, especially in expeditionary and forward operations. These reductions will cause cascading effects throughout the supply chain. The tools of Input-Output Analysis appear to be a natural fit for determining fuel costs throughout the supply chain and identifying the best ways to improve the efficiency of providing war-fighting capability. A model of the existing portion of the United States Marine Corps supply chain in Afghanistan was built as a proof of concept, along with six scenarios that explore different methods of reducing fuel consumption, to estimate the fuel multiplier for each component in the supply chain. This model was useful in providing insight and a lower bound on the fully burdened cost of fuel within the Afghanistan supply chain. The results of this analysis show that the impact of force protection fuel usage is not as large as previously believed. In some situations, fuel resupply through an airdrop could be a more efficient delivery method than ground transportation. Different methods of achieving reduced fuel consumption have different impacts on the fuel multiplier in the supply chain, thus affecting the short-term planning ability of the operational commander.