MILITARY DEMAND FOR OIL IN THE SOVIET UNION

Created: 9/1/1978

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NATIONAL SECURITY INFORMATION

Military Demand for Oil In tho Soviet Union

SMtkmai Forrifw AHWmMl Or,ltr

im

Key Judgments

We estimate that7 the Soviet armed forces consumedillion toillion metric tons of petroleum-based fuels and lubricants (POL) lo operate their aircraft, ships, submarines, land arms, and ground vehicles. Thisercent of the Soviet petroleum production for that yearercent of the refined petroleum consumed domestically.5 to the present, military consumption of oil is estimated to have grown slowly,ercent annually, and the patterns of its use by weapon system and by military service have remained relatively stable. Aboutercent of the total ir. jet fuel for aircraft operation. Fuels for ships and ground vehicles and lubricants for all systems make up considerably smaller shares.

Thc Air Forces use nearlyercent of all Soviet military POL, the Air Defense Forces and Navy use aboutercent each, and the ground and other forces combined useercent. We estimate lhat aboutercent of these POL requirements are allocated to conventional forces and support missions,ercent to strategic defense forces, and onlyercent to elements with intercontinental and peripheral kttack missions.

The Soviet military does not appear to have been seriously troubled by petroleum shortages over the past decade. Thc nation at large hasash of oil supply problems sinceut most military units have had enough POL for day-to-day needs. Occasional spot shortages arc common, however. Tho Ministry of Defense appears to have stepped up its propaganda urging fuel conservation, but it has not adopted any new conservation measures of substance. |

Military POL consumed7 costillion rublesstimate this to be lessercent of total Soviet spending for defense. In dollar terms the POL was worth approximatelyillion. In comparison, the US armed fores consumed8 million metric tons of POLnd Its cost wasercent of the US defense budget. That POL wasercent of US petroleum production ind slightly moreercent of total US consumption.

^ CONHp^NTIAl

JT current trends in force growth and operating rates continue, we project that the Soviet military will continue to useercent more POL each year and will be consumingillion toillion metric tons or POLhis growth rate, which continues that of the past decade, is well below the growth rates for domestic oil production and consumption in the USSR57 and is slightly less than the military growth rates we expect

Wetronq likelihood of future national oil supply problems, but we believe the Soviets will not reduce military POL consumption appreciably through the. By growing no faster than in the past, the armed forces' requirements for oil should impose no greater burden on national resources lhan they do now. Moreover, to save enough petroleum to affect the Soviet economy, the military would have to cut its forces and weapons inventories and decrease thewhich it operates its equipment. These actions would require major policy shiftsind that the Soviets have been generally unwilling to make in the past.

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PREFACE

" 1 *

This assessment presents estimates of the current levels and trends of oil

consumption by tho Soviet military1 and future requirements

It focuses on whether theikely to reduce its use of petroleum if the

Soviet Union shouldightening oil supply situation through the

.

This assessment covers POL consumed directly by the Soviet military in naval, ground, and air activitiesoutine and day-to-day basis. These products include jet fuel, marine and automotive diesel fuel, automotive and aviation gasoline, marine fuel oil (fJotsklleavy, low-sulfur fuelnd lubricating oils and greases.

The POL consumption estimate discussed in this report omits:

Strategic reserves. Although these probably contain enough POL to support major offensive operations for several months along one or more fronts, additions to reserves are probablymall portion of total year-to-year military POL requirements.

Wartime requirements.

Fuel burned to generate electricity, to heat buildings, and to newer such nonvchicular equipment as fixed radar iris. Analysis of Soviet practices (and comparison with our own) suggests that such use probably constitutes less thanercent of the armed forces' total direct oil consumption.

Consumption by other organizations in providing goods and services purchased by the military. This includes defense industrywhich Is probably the only sizable military-related use of POL not covered in this analysis.

Petroleum derivatives used as construction materials (tar.nd the like) in military facilities and roads, as well as fuel* and lubricants used in civilian construction equipment engaged inthem. (We do, however, include POL used to operate equipment of the Construction Troops.)

t) Diesel fuel for military railroad operation; the amount is probably trivial, because the Ministry of Railways provides most routine rail

1 Por iMi iMlytlidefini ihi Soviet military (or armed Torca) lo include Ihe Oround. Air,andRoe*tiho Nivy. illof ihe Minlitry olba HOBand Slant! Trooc* and tha Internal Troop, of the MlrUatry of Iniamal Affair*oribaat onaajoriea, aaa IWiStMH u. .

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transport. The armed forces operate mainly small switching equipment. j

g) Various other petroleum derivatives such as cleaning solvents, lamp kerosene, de icing fluid, and antifreeze. The Soviet military appears to use relatively little of these products.

We have not measured actual Soviet POL consumption. We derived the estimates and projections presented in this report by simulating the probable military requirementscries of mathematical and computer models, which approximate what wc believe to be the Soviets' own formulas for estimating their petroleum needs. These formulas use such information as order-of-battle estimates, equipment inventories, operating levels, and fuel and lubricant consumption rates.

In general, our estimates should be regarded as relatively accurate for the middle and, the period for which our input data are best. Our estimates of operating rates and equipment inventories are less certain for earlier years. Least certain are the estimates of future consumption, because the order-of-battle and operating rate projections that support themairly large margin of error.

These estimatesroduct of ongoing research into the cost and resource implications of Soviet defense programs. The results of this overall effort arc summarized periodically in comparative estimates of US and Soviet military activities and spending.1

The information cutoff date for this analysis is

oUmw Cat Cmwmmtnm mftmM and US Dtfttut.ikU-UW. and Etlimattd Sovitl Dtftntt Sending: Tnmd* md Promtu,kumM

CON^fDENTIAL

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CONTENTS

Key Judgments

Nalional Petroleum Supplies and

Military Petroleum Consumption

Estimated Military Oil Demand

The Military as an Oil Consumer

Military Consumption

The Cost of Military

Comparison With US Military Consumption

Prospects

Figures

1 1 J

Estimated Soviet Oil Supply and vi

Estimated Annual Consumption of POL by the Soviet Armed Forces 4

Estimated Soviet Military POL Consumption by Product and Use.

4

Soviet Military POL Consumption by Force and Mission,

5

Military POL Consumption, .7

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Figurestimated Soviet Oil Supply and Demand

. i

Domaalfc Consumption Pattern,

25%

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Annual Supply and Oamand (In million matrk tona)

' rfaaiduala (inoluding fuel oil) 4fl%

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Military Demand for Oil In the Soviet Union

National Patrobum Supptlttump4len

The Soviet Union produces more oil than any other country in the world.7 its annual oil supplyillion metric tons, of whichere produced domestically. In that year tbe internal demand was onlyn metric tons, and the rest of the oil.was exported (seelmost half of current Soviet oil consumption is composed of residualncluding heavy fuel oilsiesel fuels (abouterceni of annualand gasoline (slightly underer-cent) are also important. Kerosene (this category includes jet fuel) and lubricants account for the rest of domestic consumption.

5roduction and coirh.,np-tion grew in the USSR at rates averagingercent annually;owever, the growth appears to be slowing. We anticipate thatby the beginning ofhe growth rateoth will be lessercent. The Soviets should continue to be able to satisfy their own petroleum requirements and most of thoseheir allies in Eastern Europe for several more years. By thehe USSR might be forced to curtail exports In order to meet internal demand.

I6 we have seen Increased indications of fuel supply problems In the USSR.ivilian enterprises and some military units have complained of spot shortages of petroleum,diesel fuel and gasoline. The shortages

ho cidory of residual* Include* ill petroleum producti other thin luotirw. diesel fuel, kerosene, and tabrtcalingood portion or raiduali ar* and at raw materlali for. manufactured producii rather than ai energy sources.

apparently are due more to structural problems* than to resource scarcity, but several othermay be involved as well. Soviet planners may have overestimated both the size and theof Siberian reserves and underestimated fuel requirements for recent agricultural harvests and industrial activities. Poor planning inplus an increasing government reliance on the sale of oilay of gaining badly needed hard currency, may also contribute to these shortages.

Military PalroUum Comompllon

Determining Factors. The Soviet armed forcesull range of petroleum products to operate their ships, submarines, aircraft, land armaments, and automotive vehicles. In any given year, requirements for military POL are determined chiefly by the equipment inkind and amount, the fuel-consumingand the rate at which the Soviets operate

also important

it

Certain other factors are drivers of Soviet POL needs;

Geography. The arnW forces of the Soviet Union are dispersed over one-sixth of the land surface of the earth. In much of the area, rugged terrain, climatic extremes, and limited transportation Increase the energy requirements for operations.

Size of the armed forces. Moreillion men (double the strength of the US military) in ateparate military iruualla-

atnicwralemporary diilocallon In luppllci roultlni from Inadequacies In pUnninx or technical problems In production or dlnributfon. Tho Scrletlagued by >uchbkh mut ba differentiated Tram permanent resource iboruge*.

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COr^flOENTIAL

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tions in thc USSR alone would challenge any military logistic

Strategic and tacticai dovif.ie. The Soviets stress mobility, rapid advance, andirepower; these require peacetime exercises and training which use up much of the that might otherwise be saved by thc day-to-day operating rates; for equipment.

Allocation of POL The Soviet militaryplans its logistic needs, including petroleum requirements,uarterly'and yearly basis and merges them in its five-year plan.rojections ultimately become part of the plans for the civilian ministries that supply petroleum. Calculations supporting the military plans are made by fuel supply and finance officers in the Rear Services, in consultation with line

Soviet military and civilian handbooks show us how the officer calculates his unit's POLfor one accounting period. He lists all the equipment, the fuel and lubricant consumption rates for each type of equipment, and the rate at which the unit intends to operate each type. After multiplying these figures, he adjusts the total POL requirementet of factors to account for evaporation, waste, maintenance running, climate,

Organization and Management, [Within the Soviet armed forces, POL acquisition,nd distribution are managed by the Fuel Supply Directorate of the Rear Services. At eachdistrict or fleet, army or naval base, division, anduel supplywho is subordinate to the deputyor rear services, is in charge ofersonnel and operations. The [directoratestorage and supplyor petroleum down through the battalion level. !

|

t For peacetime operations, the fuel supplyof most military units purchase their POL

| directly from civilian depots in the area, which also supply industrial and commercial users. Thc military and the civilian enterprises pay the same "industry-wholesale" prices for bulk petroleum

| products, but the military has first priority.

Transportation companies and motor transport battalions and regiments move the POL from the point of initial supply to thc consumer units, usually by truck or rail. The armed forces pro-vide the containers. Supply and maintenance platoons, or their equivalents, handle the final distribution.ilitary actionajor training exercise, pipeline brigades augment this supply system by laying pipelines from rear supply points to front-line combat units.

Norms for the management and control of petroleum stocks at the unit level are, on paper at least, explicit and strict. Regulations specify how thc stocks must be stored and handled. Thc POL consumed is controlled by means of coupon books and equipment logs and must be accounted foraily basis.

Conservation and Waste. The Soviet military regards petroleum as second only to ammunition in logistic importance and places great stress on its efficient use and conservation. Measuresto keep consumption low include:

Limiting the use of POL wherever substitutes are available. For example, to avoid using antifreeze, the Soviets commonly use water in vehicle radiators and drain them to prevent freezing.

Keeping equipment operating rates low.

Restricting POL consumption to planned quarterly and annual levels, curtailingif the allotment is used up before the end of the accounting period, and requiring that overages be made up out of future allotments.

Rewarding individual servicemen forfuel savings, rebuking fuel wasters by name, and bombarding all the troops with propaganda and slogans like "Take care of the drops, tne tons will take care of themselves."

These measures seem to hold military POL consumption to the planned levels, but they do not guarantee efficient use, In military journals, articles advocating fuel conservation pointedly avoid recommending any change in the nature.

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number, or quality of military operations. If overall supplies run short, tbe planners seldom reduce military POL allocations; instead, they require the civilian suppliers of petroleum to make up in later deliveries any shortfalls ui the allocc'.ions. On the other hand,ilitary unit has unused POL at the end of (he accountingeriod. It can "write it off rather than applying it to reduce tbe draw for the next period. Finally, the planning factors used to compute POLallow generously for "excess use."'

As much asf total armedconsumption is accounted forome of this "excess use" Isbut much of it appears to be causedcorrectable factors such as theft andFor example,indi-

cated that within the Soviet armeo torces POL Is an attractive Item to be stolen for barter and makes an assignmentuel supply depot highly desirable. Soviet military procedures for both operational and stored equipment require checking fuel frequently for contamination or deterioration, as well as an inordinate amount of topping ol<', emptying, and refilling of fuel tanks. This constant handling, often under relatively primitive conditions, increases the chance of spillage and waste as well as the opportunity for theft. Military authorities seem to Ignore much of this loss, writing it off as "evaporation."

Shortages, The Soviet military does not seem to have been seriously troubled by petroleum shortages over the past decade.

mention only occasional spot shortages oi tne type that any military unit may encounter, par-

'"Eioaatrafara to Use ditfarwos bttwm UM QualityPOL allotted or prcwed ind Um (mourn whose as* con bo letuillj accounted for Inilitary puia'nf of POL aaa. Ilka tbe overall SovietpfaumUg, nuai bo rigidrine* ripply and demand Into balance through nonrrurkei rntehanlims. Even minor deviation* from the plan by any ol tbe oraanltations accrailni under It canippliae; affect Ihrouiaout the tcoBorar. To help thia ritidHy adapt to the real world, Um Sovku umd to build alack leu ibatr rJ"mint

hai ftgara from Soviet mllhary joaraab and from published nornu and suitsika for fool leases. In comparison, accordina lo the US Defense Foal Iwppq Center, tha US military loan leuercent. rrosUy because of normal espanslort and contraction,

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ticulany when operatingemote area. Such deficiencies, which arise from structuralin the national supply, are fairlyfor most resources in thc Soviet Union. When they occur, however, they can cause serious local problems.

Shortages of the type most frequentlyusually involve gasoline and dieselitems for which the USSR has never had enough refinery capacity. Because operational POL is supplied by civilian depots, many of the reported military deficiencies may reflect temporaryshortages passed on to the armed forces. In addition, military units frequently provideand material to civilian agriculture and industry, and this also seems to cause some fuel deficiencies. I

Printed rhetoric urging fuel conservation in the military appears to have increased in volumeut the Ministry of Defense does not appear to have taken any additional concrete actions to reduce its fuel consumption. Theparty slogans released to the military7 forh anniversary of the revolution gave equal billing to the conservation of fuel and other materialcontinuation of pastof the subject.

Estimated Milltory Oil Demand

The rVUaHory aa an Otl Consume*

We estimate that the Soviet armed forces consumedillion toillion metric tons of POL7 to operate their equipment; thisercent of national oil productionercent of consumption for that year (seeirect military requirements for oil inre probably about one-third hightr than they werehese increasedare primarily the result of thc increased size uf the armed forces and the introduction of higher performance equipment that uses more fuel.

5oviet militaryof petroleum appears to have grown at an annua> rate of slightly mcr?ercent. This was about one-thirdate of growth for

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CONWOINTIAl

a. Estimated Annual Consumption of POL by tha Sovlat Armed Forces

Figurestimated Soviet Military POLby Product and7

j j

oillion rrwMrlc oillion matrio lont

i p . I

-J- pj-l

Annual POLto opwiM military aircraft,landnd vahtclee. jl

total domestic consumption and production of oil. Therefore, although military consumption is substantially greater than it was, it probablylightly smaller share of national consumption than it was5 and uses somewhat less of the national supply of petroleum. Consequently, in terms of direct use, tbe Soviet military hasroportionately less significantof oil.

'

H 1 mt fj mm mm ffc^LrilU^*l

iiviii*

By End Use and by Product. Of theoillion metric tons of POL consumede estimate that more than two-thirds were used to operate aircraft. The remainder was consumed in about equal shares by vehicles and landercent) and by ships ands shown in figurehe Soviet mill-

taryoillion metric tons of jet fuel inone-third of the national kerosene production. In contrast, tbe military consumes an almost negligible amount ofgasoline.

] Less thanercent of mil tary requirements were for diesel fuels. Automotive gasoline, still the principal fuel of tbe military truck fleet in the USSR, accounted for underercent. Naval fueloiskll mtuut) probablynotercent and lubricantsercent.

he pattern of Soviet armed forces consumption of petroleum appears to have shifted heavily toward jet fuel, the result of rapid expansion and modernization of aircraftDemand for diesel fuels and gasoline has increased in absolute terms, but at nowhere near the rate for aviation jet fuel. Demand for naval fuel oil hasconsequence of the re tirement of many large, obsolete mazur-burning ships and tbe introduction of more efficient distillate-powered units.

Except for kerosene-based jet fuel, the Soviet armed forces do not appear to beisproportionate share of any op- petroleum product from the economy. Military useforercent of nationalof diesel fuel and probably lessercent of the other. POL products,

By r'orce and Mission, The Soviet Air Forces (Frontal Aviation, Long Range Aviation, and Trai port Aviation) appear to account for about one-half of all POL currently consumed by the military. The other elements of the armed forces consume much smaller shares (see

When we analyze current Soviet military POL consumption by minion (as the US military definest becomes clear that the bulk of it is driven by conventional forces and supportajor reduction in Soviet strategic arms would not mean major oil savings.

h !

The CastMUHery POl j (ij.li;

i We estimate that the Soviet military spentillion7 for!

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Figurestimated Soviet Military POL Con-sumptlon by Force and7

By lores

By mission (US-daflned catsgorlas)

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aboutercent more than' (This is equivalent, when measured7 US prices as paid by the Department of Dcfense, toillion.)

Aboutercent of current Soviet(valued in rubles) for military POL appears to be devoted to jet fuel for aircraft. The price of jet fuel relative to that of other fuels is much lower in the USSR than in the United States, and this lessens the economic burden of aircraft operations on the Defense Ministry budget.

Military consumption of POL appears tocct::Medairly small, constant cfopjhan 2Soviet defense costs5ver this period armed forces petroleum requirements grew only slightly, and product prices remained relatively stable.

Throughouthe Soviet Ministryefense seems to have experienced little if any petroleum cost pressure. Ample domestic oil supplies in the USSR and the centrally fixed and artificially stabilized price system have kepto the military low.

An increase in ;he wholesale price of gasoline, announced by the Soviets as partrice revision earlyrobably willignificantly alter the relative standing ofeum expenditures in the defense budget.appears to account foroercent of current military POL costs (measuredven though the price for gasolineoubled, total POL expenditures should rise by no more thanercent. '< ;

: : i

Cejmoaritart with US Military Cangtimptton

According to data supplied by theFuel Supply Center, thc US armed services consumed8 million metric tons of POL1 This was slig'uN moreercent of total US domestic ccmumption of oil

' Th* figures for both yean ire catculited In0 prion for bulk patrol cum product! purchased wholesale In Ihe Moscow area. Tha price schedule for refined oil prod well In lhe USSR remainednchangedasoline price revtsko In early

' This flier* would1 million loas If burner fust oils for US military heating plants and generators were Ineludad.

for that year; it wasercent of US production of petroleum. US mililaryof oil has decreased sharply since the, thc result partly of the decrease in force levels since the Vietnam war and partlyoncerted effort at energy conservation.the US military is currently using aboutercent more POL than thc Soviet military.

The difference can be explained primarily by the rates at which the two armed forces operate their equipment. The ground forces of both nations operate their vehicles and land arms at relatively comparable rates, and the disparity in the annual POL consumption for ground forces is not large, but some US aircraft and ships are operated several times as much as theSoviet systems.

In general, the current pattern of direct POL consumption by the US military is similar to what we have found for the Soviets (secor example,ercent of annual USis jet fuel andercent is distillate (predominantly diescl)the same proportions as for the Soviet armed forces.ercent of US consumption is made up of automotiveomewhat smaller share thai: for the Soviets, who still rely heavily on gasoline-powered trucks. The remaining US products each account forercent of the total. Theirspecial fuel oil, aviation gasoline, and lubricants, in descendingthe same as that of their Soviet counterparts.

Considered by service, the US consumption pattern alsotrong resemblance to the Soviet7 the US Air Force consumed aboutercent of all POL used by the military-Tbe Navy burned aboulercent (with as much as one-third of this being used inhe Army and Marino Corps together tookercent of total requirements.

The cost of POL to thc US Department of Defense was aboutillionercent of the Pentagon budget. Soviet consumption7 was equivalent toercent of estimated defense spending in the USSR. Unlike the Sovietof Defense, the US Department of Defense

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FigureSnnual military oil consumption1 million metric ton*.

By product

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has been subject to heavy cost pressures in the petroleum market since thehe United Slates has markedlyits military POL use over the past five years, the cost of its POL In current prices has steadily risen.

Pro. pott.

We estimate that5 the Soviet armed forces will be consumingoillion metric tons of POL annually, if they develop as the US Intelligence Community curently predict* and if they do not change their POL management practices and their equipment operating rates. This increase from the currentoillion tons represents an average annual growth rate75ittle under 2bit less than that for the previous decade.

Soviet military requirements for petroleum arc unlikely to increase beyond levels dictated by force growth.arge measure, POLis determined by equipment operatingin turn, are functions of Soviet military doctrine, force size and activity levels, training procedures, hardware procurementand maintenance and logistic capabilities. Wc have no evidence that Soviet military leaders are sufficiently dissatisfied with these operating practices to make rapid or major changes in the factors which determine them.

Further, we do not believe that the Soviet Union will have incentive to reduce its rate of military petroleum consumption significantly or to reverse the modest growth trend. Thisis based on the following considerations:

The Soviet economy appears to havesupported the military petroleumIn the past. We do not expect armed forces oil requirements to increase relative to those of other lectors or to outpace domestic production capability, and we assume the Soviet military should have no new difficulty In satisfying its POL needs.

The current military demand for petroleum is relatively so small that any foreseeable cut would release little oil to civilian consumers.

7

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has high priority in theconomy and probably would not be forced to make major sacrifices unless all otherhad been exhausted.

The annual cost of petroleum appears to bemall share of defense costs and probably will remain so even after the recent gasoline price increase. Ii seems unlikely that oil conservation would be undertaken for financial reasons.

We expect that the largest Soviet military POL requirement will continue to be jet fuel, which is easy to refine and poses fewer supply problems in the USSR than do many other

i petroleum products.

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The Soviet armed forces might, of course, be motivated toward some modest oilmoreoercent of projectedif theleaders perceived that the familiar spot

shortages were increasing orenuine oil shortage were at hand. The conservation efforts would most likely be directed toward lowering consumption just enough to ensure that military needs could be met out of actual petroleum supplies. No fundamental change would betighter controls over fueland use and better incentives to efficient management.

Although the military leaders are aware that these marginal savings are potentially available, they bave had Utile success in realizing them in tbe past. There is no indication to date that the Ministry of Defense is planning toonservation program of even this size.

To conserve moreoercent annually, the Soviet military would have to eliminate virtually all "excess use" of oil, operate some equipment less often, and, ultimately, cut the size of the forces and the amount of their equipment. There Is no current reason to believe that tbe Soviet Union will do so.

Comments and queries regarding thit publico* lion arc welcome, They may be addressed io

of Strategic Research, on

conf/dential

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