The Ministry of Defence's senior economic adviser forecasts future movements in fuel prices and foreign exchange rates based on a range of sources. These are reflected in the department's corporate planning assumptions (CPAs), used in internal planning rounds to estimate the likely cost of fuel to the department in a given financial year.
MoD's current CPAs suggest a reduction in propulsion fuel costs for 2009-10 compared with 2008-09 for each of the main fuel types: aviation, marine, road and “other”. We continually monitor fuel prices and exchange rates and adapt our CPAs accordingly.
The net additional cost of fuel used on operations is recovered from the HM Treasury reserve.