Pentagon Reports A $3 Billion Spike In Fuel Prices

( Out of control fuel prices aren’t just costing the American public; the Pentagon is feeling the increases as well.
On Wednesday, a senior official with the Pentagon said during congressional testimony that increased fuel prices would cost them $3 billion more than they had originally projected for fiscal year 2022.
Mike McCord, the comptroller, made those remarks as part of a hearing regarding the $773 billion budget request the Pentagon made for defense in fiscal year 2023. McCord said fuel alone would cost $1.8 billion more than the Pentagon had expected for the remainder of this year, on top of the $1.5 billion additional Congress included in the budget that became law in March.
Speaking to the House Budget Committee this week, McCord said:
“Fuel is our most volatile and easily recognizable price increase when prices change. Largely due to the Russian invasion of Ukraine, we estimate a bill of $1.8 billion for the rest of this year, so over $3 billion across the course of this fiscal year.”
Many Republicans and even some moderate Democrats have issued criticisms of the rather low rate of inflation that was built into this FY23 budget. The group of lawmakers have said the top-line of the federal defense budget should be considerably more than the $813 billion that the Biden administration has requested.
The FY23 budget request is only $30 billion more than what was appropriated for the current fiscal year, representing only a 4% increase.
Many of the top leaders at the Pentagon have said this budget assumed Congress would need to update the 2.2% inflation rate. Trying to answer why they had those assumptions that were inaccurate, McCord said that inflation was a moving target that was driven even higher than expected due to Russia invading Ukraine back on February 24.
He said:
“I would agree that anyone who would fix inflation in advance is going to be wrong, and I know we’re going for more data.”
Following the congressional hearing, McCord said that DLA — or Defense Logistics Agency — purchases all the fuel for the Pentagon. Then they charge the agency for whatever fuel they end up using.
DLA isn’t able to absorb additional shocks in fuel price, the comptroller said, and the company has already informed the Pentagon that their prices are going to increase come May 1.
As McCord explained:
“Starting next week, you have a bill. We’re going to work with Congress on how we liquidate that bill. Reprogramming [dollars between accounts] is one way to do it. If Congress would give you a supplemental [appropriations bill], you don’t need to reprogram. No question which I would like better.
“Prices continue to evolve as we finalized our budget. We recognize the impact of global economic conditions on our capabilities in this budget and we’re prepared to work with Congress on the best solutions to these challenges.”