A complete alternative-fuel fleet by 2011? - Air Force News | News from Afghanistan & Iraq - Air Force Times

A complete alternative-fuel fleet by 2011?

The Air Force plans by 2011 to qualify all the aircraft engines in its inventory to run with alternative fuels, a senior Air Force official said Monday. The plan also calls for purchasing 50 percent of fuel from domestic sources by 2016.

The service is taking a harder look at alternative fuels, the official said, because oil prices are likely to continue to rise, further straining an already tight Air Force budget.

The service’s annual fuel bill spikes about $60 million for each $10 rise in the price of a barrel of oil, Air Force Secretary Michael Wynne told reporters in June.

The Air Force is the largest fuel consumer in the U.S., burning 2.6 billion gallons in 2006.

The B-52 is the only Air Force aircraft currently approved to use alternative fuels. Cold-weather ground testing with a 50-50 blend of traditional crude oil-based fuel and a fuel derived from natural gas wrapped up earlier this year.

Another effort to save money on fuel wasn’t as successful, the official said.

The Air Force last year asked the Defense Department if it could invest in fuel futures — in effect pre-purchasing fuel at today’s price in anticipation that fuel prices will rise in the future.

The Air Force wanted to purchase about 10 percent of its fuel in this way, the official said, but the Defense Department rejected the proposal.

Such “hedging” strategies have been used successfully by companies such as Southwest Airlines, which has for several years paid below-market fuel prices through hedging.