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* Alternative energy will remain far more expensive
* Military fears of fuel shortages called unfounded
* Findings may stoke clash with Congress over renewable fuel
By David Alexander
WASHINGTON, June 19 (Reuters) - Renewable fuels for U.S. military ships and jets are likely to remain "far more expensive" than petroleum products absent a technological breakthrough, a study for the U.S. Air Force found on Tuesday, questioning a Pentagon push for alternative energy.
The study by the RAND Corporation think tank said that while the U.S. Defense Department is a huge consumer of fuel at about 340,000 barrels per day, that figure is a tiny fraction of the 87 million barrels per day of global demand, too small to influence price significantly.
Efforts to make fuel from seed or algae oils are not producing at the scale or price necessary to meet the military's demand at a reasonable cost, said James Bartis, the RAND researcher who authored a volume of the report.
"Pending a major technical breakthrough, renewable jet fuel and marine fuels will continue to be far more expensive than petroleum-based fuels," he said.
That assessment is likely to stoke the current confrontation in Washington over the Pentagon's efforts to promote alternative fuels. U.S. Navy Secretary Ray Mabus has angered members of Congress by pushing development of biofuels for use in ships and aircraft.
Lawmakers in both houses of Congress have proposed a measure that would bar military spending on biofuels unless they are competitively priced with petroleum.
The move came after the Navy spent $12 million on 450,000 gallons of biofuel to power an exhibition next month of Mabus's Great Green Fleet, which will use nuclear energy in its aircraft carrier and submarines and a blend of biofuels and petroleum in its cruisers, destroyers and jet aircraft.
Mabus says the U.S. can create a market for alternative fuels that is large enough to drive down prices to the point where they would be competitive with petroleum.
Lawmakers are skeptical of that view, saying Mabus and the Pentagon have not produced the analysis needed to back up his arguments.
Representative Randy Forbes, one of his leading critics, said on Monday that Mabus needed to explain how he came to the conclusion that renewable fuels can achieve price competitiveness with petroleum.
"We are absolutely opposed to the secretary trying to spend taxpayer money to create alternative markets just because he wants those alternative markets without any analysis to substantiate what it's going to take to successfully do that," he said.
In his report, Bartis said price fluctuations in the oil market would at times force the U.S. military to spend heavily on fuel, but "alternative liquid fuels do not offer DoD (the Defense Department) a way to appreciably reduce fuel costs."
He said U.S. military fears about not having access to an adequate fuel supply were not credible. The military consumes about 340,000 barrels of oil per day, less than a half of 1 percent of global demand. The United States produces more than 8 million barrels of oil per day domestically.
"There is no credible scenario in which the U.S. military would be unable to access the supplies of fuel it needs to defend the nation," Bartis said.
He said the most effective way for the U.S. military to deal with fuel concerns is to reduce its own consumption by purchasing more energy-efficient equipment and implementing other conservation measures.
Although questioning the military's efforts to pioneer alternative fuels, the RAND report underscored the importance of the Navy and Air Force in promoting stability in the oil producing regions by ensuring sea lanes remain open to all.
The study said the Caspian region was of growing importance for global oil supplies, with Turkey aiming to become an international energy hub.
"To achieve that ambition, Turkey needs to improve protection of its pipelines and energy infrastructure, which have been the target of repeated terrorist attacks by the Kurdistan Workers Party (PKK)," said Andrew Weiss, who authored a volume of the study.