In America, we're used to doing things bigger. Bigger cars. Bigger hamburgers. Bigger deficits. But Big Government is cutting big energy costs -- paving the way for a more efficient energy future. Here's what you need to know.
Over the last 30 years, federal government energy use been steadily declining, and for fiscal year 2013 (most recent data), it hit its lowest point ever. Uncle Sam consumed just 0.96 quadrillion British thermal units (Btu) -- around 50% less than 1975 levels.
There's one major reason Big Government has managed to cut its energy guzzling: efficiency. It's not that the government has gotten smaller -- it's gotten better at being bigger. For example, although the total square footage of government facilities is almost the exact same as it was 30 years ago, the facilities' collective energy intensity (measured as thousands Btu per square foot) is almost half of what it used to be.
Fuel efficiency has also been a major boost to Big Government's energy decline. Vehicle and equipment energy use accounted for around 60% of all energy use in 2013, with the Department of Defense and Postal Service chalking up 94% of that. Within the Defense Department, specifically, the U.S. Air Force is a big spender, notching 53% of total energy use for military operations.
Predictably, most of that energy is guzzled up as jet fuel . In 2012, the Air Force spent $7.7 billion to keep its birds gassed up , but it's attacking its fuel inefficiency on all fronts. While investors can't invest directly in Air Force advancements, they can invest in the companies helping it improve. Always the innovator, The Boeing Company (NYSE:BA) developed a "blended wing" design for its unmanned X-48C aircraft. Test flights in 2012 and 2013 show promising results , with potential net fuel savings of 60% if replacing conventional C-5 or C-17 cargo aircraft .
But it's not just revolutionary technology and new planes that are improving the Air Force's efficiencies. Sometimes, a substantial change can fit in your pocket. The Air Force's Air Mobility Command unit estimates that if it replaces weighty paper material such as booklets and pamphlets with iPads, it would equate to around 130 pounds off each plane with an estimated $700,000 in total annual savings. That's a small but simple step in the right direction, and is indicative of much of the larger market appeal and value add of Apple products, whether you're strapped into a fighter jet or not.
The federal government has made leaps and bounds in energy efficiency, but that hasn't necessarily dropped its bottom-line bill. Energy costs (adjusted for inflation) reached a record low of $9.4 billion in fiscal 2000, but those costs bounced back to $24 billion for fiscal 2013 (most recent data).
Declining oil prices (the government's largest energy source) could cut expenditures significantly for 2014 and 2015, but taxpayers shouldn't expect any surprise rebates from Uncle Sam anytime soon. To put things in perspective, $24 billion is around three times the EPA's annual budget, equivalent to government spending on agriculture, and half of what we spend on justice administration or international affairs. That's still major money.
The Federal Future
Looking ahead, Big Government has more in store for reducing its energy expenditures. Uncle Sam wants his federal motor fleet to be 20% more efficient by the start of fiscal 2016 than it was in fiscal 2005. This year, he wants building energy use to clock in 30% below 2003 levels, and new or under-renovation buildings to be 65% more efficient than those in fiscal 2003.
Despite the continually big bill, one thing is clear -- it could've been bigger. A back-of-the-envelope calculation reveals that, if the federal government used as much energy in 2013 as it did in 1975, costs would've clocked in at $38 billion. That means energy efficiency efforts paid off to the tune of $14 billion in a single year. Big Government isn't known for its thriftiness or efficiency, but when it comes to energy use, our public servants have done a decent job.
Justin Loiseau has no material interest in any statements made in this article, but he would be an extremely anxious biker if all USPS mail trucks were converted to electric power. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.