Defense Budget: Review of DOD's Report on Budgeting for Fuel Cost Fluctuations
Abstract
The Office of Management and Budget (OMB) establishes for the Department ofDefense (DOD) the price DOD will use for pricing crude oil when constructing itsbudget for upcoming fiscal years. DOD in turn uses OMBs price in establishing thestandard price to be used for a barrel of fuel for budgeting purposes by DOD fuelcustomers such as the military services. Because of the volatility of world petroleumprices, the standard price for a barrel of fuel included in the Presidents annualbudget request for DOD may be lower or higher than the actual price established bythe world market at any point in time after DODs budget request is submitted to theCongress. During the fiscal year, DOD pays for fuel at the actual market rate, whichtypically varies from the budgeted rate. As a result, if the actual price of crude oilincreases above the price DOD charges its customers, more dollars are needed to payfor fuel than originally budgeted. If the actual price is lower than what DOD chargesits customers, DOD has more dollars than needed. Additionally, if DOD responds toincreases in the world market crude oil prices by increasing the price it charges itscustomers above what they initially budgeted, the customers will have additionalfunding needs to pay their fuel bills.
Document Details
- Document Type
- Technical Report
- Publication Date
- Apr 26, 2007
- Accession Number
- AD1156489
Entities
People
- Sharon L. Pickup
Organizations
- United States Government Accountability Office