A Cost Benefit Analysis of Transitioning the USN to a Single Fuel Type
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Authors
Sullivan, Ryan S.
Aros, Susan K.
Véronneau, Simon
Subjects
naval fuel
supply chain
cost benefit analysis
CBA
JP-5
F-76
supply chain
cost benefit analysis
CBA
JP-5
F-76
Advisors
Date of Issue
2021
Date
2021
Publisher
Monterey, California: Naval Postgraduate School
Monterey, California. Naval Postgraduate School.
Monterey, California. Naval Postgraduate School.
Language
en_US
Abstract
Fuel distribution and its availability is key to maintain force posture during all phases of a conflict. Given the great power competition (GPC) increasing between the U.S., China, and Russia, and a shift to distributed maritime operations, it is important to assess the cost benefit of changing the fuel distribution to a single fuel type. The Naval Postgraduate School (NPS) proposes to conduct a cost benefit analysis (CBA) of switching entirely or partially to JP-5 fuel as opposed to the current multiple fuel types used on ships aircrafts and vehicles. Specifically, this research addresses these main questions: If the Navy adopted a policy allowing a 50% JP-5 and 50% F-76 mixture to be issued to surface vessels in lieu of F-76, what would be the cost benefit? Would this policy improve historical turnover rates of the Department of Defense's JP-5 inventory? What infrastructure investments are necessary to adopt a single-type Naval fuel? We use past list purchase cost and standard sales prices for JP-5 and F-76 as our primary data sources to calculate potential savings from shifting to the SFC. Regression analysis is used to calculate the estimated purchase costs and sales costs for fuel under the current two-fuel concept. The predicted consumption figures for a single fuel concept (SFC) were used to predict the total fuel cost of JP-5 for future years as a single fuel in the fleet. We find significant cost savings by switching to a single fuel concept instead of a fuel policy mixture of using 50% JP-5 and 50% F-76. If the purchase and sales prices of JP-5 remain the same upon implementation of the SFC, there is potential for substantial savings for the government.
Type
Report
Description
NPS NRP Executive Summary
Series/Report No
Department
Graduate School of Defense Management
Organization
Naval Research Program (NRP)
Identifiers
NPS Report Number
Sponsors
N4 - Fleet Readiness & Logistics
Funder
This research is supported by funding from the Naval Postgraduate School, Naval Research Program (PE 0605853N/2098). https://nps.edu/nrp
Chief of Naval Operations (CNO)
Chief of Naval Operations (CNO)
Format
Citation
Distribution Statement
Approved for public release. Distribution is unlimited.
Rights
This publication is a work of the U.S. Government as defined in Title 17, United States Code, Section 101. Copyright protection is not available for this work in the United States.