Expect the cost of motor fuels to follow falling oil prices in coming months. Ample supplies will outpace demand from the sluggish economy. In the case of gasoline, come August, refiners will also switch from costlier summer blends.

Opening up the Strategic Petroleum Reserve will add to the downward push. But given that prices are already retreating, the White House decision to use the SPR to replace one month’s supply of Libyan oil is more an effort to pump some confidence into the economy than to dampen oil prices. Crude will head toward $85 a barrel.

Pump prices will drop by an additional 20¢ to 25¢ a gallon, to about $3.40, national average, in late summer. Gas at $4 a gallon is but a memory, at least for now, though prices today are still high relative to last summer, curbing vacation driving. Diesel…down about 15¢ a gallon, to $3.85 or so later this summer.

Utilities are eyeing adding solar as a power source for conventional plants. Augmenting natural-gas-fired power plants with cells that capture the sun’s heat can boost a generating station’s total efficiency and increase its peak capacity. By using the plant’s existing infrastructure…steam turbines, transmission lines…they can produce renewable energy 30% cheaper than stand-alone solar installations. For utilities with ample sun and acreage, the cost savings are attractive. Hybrid plants can cut fuel usage during the midday hours, when loads tend to rise.

Further out: New plants designed specifically to integrate sun and/or wind, instead of adding them later. A new design being built in Turkey by General Electric promises to achieve record efficiency levels by marrying next-generation gas turbines with energy from the country’s abundant sun and wind resources. Look for it in 2015.

The Department of Defense is going to make a big push on energy savings. The military is the U.S.’ biggest consumer of oil, burning 5 billion gallons in 2010. Dependence on oil is both a budget drain and a big safety risk for field soldiers, who are particularly vulnerable to attack when they’re trucking fuel to remote bases.

On tap: Investments in better batteries, solar gear and smart electric grids. Packing more power into lighter batteries will reduce the burden on soldiers, each of whom already totes 10 pounds of batteries to power radios and laptops. New portable solar systems will be used to recharge batteries, thus relieving soldiers of having to carry several batteries on patrol. Plus more bases will run on microgrids, which route power more efficiently and defend military installations from cyberattack.

Eventually, those gains will spill over into civilian applications. The military has the resources to overcome high start-up costs that can spook private developers. And the stresses of combat operations ensure the most rigorous testing procedures for new technologies. Topflight engineering is a given when troops’ lives are at stake.

The kiplinger Letter June 2011