Subsidized fuel is an incentive for government employees to sell it at market and pocket the arbitrage profit. The war isn't any cheaper if the military is receiving subsidized fuel.
Think you're being gouged by Big Oil? U.S. troops in Iraq are paying almost as much as Americans back home, despite burning fuel at staggering rates in a war to stabilize a country known for its oil reserves.
Military units pay an average of $3.23 a gallon for gasoline, diesel and jet fuel, some $88 a day per service member in Iraq, according to an Associated Press review and interviews with defense officials. A penny or two increase in the price of fuel can add millions of dollars to U.S. costs.
Critics in Congress are fuming. The U.S., they say, is getting suckered as the cost of the war exceeds half a trillion dollars - $10.3 billion a month, according to the Congressional Research Service.
Some lawmakers say oil-rich allies in the Middle East should be doing more to subsidize fuel costs because of the stake they have in a secure Iraq. Others point to Iraq's own burgeoning surplus as crude oil prices top $100 a barrel. Baghdad subsidies let Iraqis pay only about $1.36 a gallon.
The article reviews some history.
Air conditioned tents, forsooth. What would Genl Grant outside Vicksburg in June of 1863 have made of that? It does sound like the rich man's way of waging war: the U.S., to score propaganda points, made much of its troops being transported to the ports of embarkation in Pullman cars. Admittedly, some of those were glorified side-door Pullmans with three-high bunks, but you get the idea.
Overall, the military consumes about 1.2 million barrels, or more than 50 million gallons of fuel, each month in Iraq at an average $127.68 a barrel. That works out to about $153 million a month.
Historically, these figures are astounding. In World War II, the average fuel consumption per soldier or Marine was about 1.67 gallons a day; in Iraq, it's 27.3 gallons, according to briefing slides prepared by a Pentagon task force established to review consumption.
The surge in demand can be attributed in part to the military's expanding aviation fleet, including helicopters, and its reliance on planes to shuttle cargo and troops between the U.S. and Iraq. Vehicles, too, are more heavily armored and require more energy to run. Another major contributor is the widespread use of generators to cool troops.
At the margin, the military's use of petroleum products has little effect on world markets. But one possible sign of Iraqi progress becomes yet another reason to question the war effort.
The Defense Science Board has issued a report that appears to be a source for the article.
[O]ther lawmakers say they want to see the high costs of the war defrayed by Iraq dipping into its own oil revenues, which are projected to be substantial. Independent auditors estimate that Iraq is headed this year toward a massive surplus because of as much as $60 billion in oil revenues - a consequence of increased production paired with the sharp rise in prices.
"It's totally unacceptable to me that we are spending tens of billions of dollars on rebuilding Iraq while they are putting tens of billions of dollars in banks around the world from oil revenues," said Sen. Carl Levin, D-Mich., chairman of the Armed Services Committee. "It doesn't compute as far as I'm concerned."
Administration and military officials say Baghdad hasn't been able to spend its oil revenues so far because the newly formed government is still learning how to manage its revenues. They say Iraq's lack of spending isn't due to corruption or laziness, but rather Baghdad's inability to determine where its money is needed most and how to allocate it efficiently.
The Iraqis have a "genuine mechanical problem in drawing up national budgets (and) executing those budgets, particularly when it comes to capital infrastructure," said David Satterfield, the State Department's senior adviser on Iraq. But, he added, the government is improving with time and should be able to do more in the months to come.