Navy buys biofuel for $16 a gallon

posted at 7:00 pm on December 11, 2011 by J.E. Dyer

This is going to help the Defense Department weather looming budget cuts, for sure.  Teaming up with the Department of Agriculture (which has a cheery Rotary Club ring to it), the Navy has purchased 450,000 gallons of biofuel for about $16 a gallon, or about 4 times the price of its standard marine fuel, JP-5, which has been going for under $4 a gallon.

You won’t be surprised to learn that a member of Obama’s presidential transition team, T. J. Glauthier, is a “strategic advisor” at Solazyme, the California company that is selling a portion of the biofuel to the Navy.  Glauthier worked – shock, shock – on the energy-sector portion of the 2009 stimulus bill.

The Navy sale isn’t Solazyme’s first trip to the public trough, of course.  The company got a $21.8 million grant from the 2009 stimulus package.

Solazyme’s partner in the biofuel sale is Dynamic Fuels, a Louisiana company owned jointly by Tyson Foods and Tulsa-based Syntroleum.  Tyson and Syntroleum are distinguished by having profitable lines of business that do not rely on government grants to unprofitable “green” projects.  This does not make their biofuel product price-competitive with fossil fuels, however.  (They were induced to develop biofuel manufacturing processes by a combination of subsidies and tax breaks.)

The Dynamic Fuels plant was opened for business in Geismar, LA in 2010, becoming by far the largest biofuels plant in North America – and reportedly, in combination with a plant in Finland, a producer of 94% of the world’s biofuels.  This is great boosterism stuff, but the biofuels produced by Dynamic Fuels are still considerably more expensive than the fossil-fuel alternative.  Dynamic Fuels has begun supplying aviation biofuel to KLM, the Dutch flag carrier, but of course, the use of more-expensive biofuels by commercial carriers has to be subsidized by governments.

If governments stopped subsidizing biofuels, their artificial “profitability” would disappear overnight.  Price-wise, they can’t compete with fossil fuels.  The day may come when they can, but subsidizing them while they don’t is not a method with any record of success for encouraging price efficiency.  What it does instead is create languishing public dependencies and tremendous opportunities for cronyism, as demonstrated in the Solyndra scandal.

As the Institute for Energy Research article (top link) indicates, the US has enormous reserves of both conventional and unconventional oil and natural gas resources.  Opening them up for exploitation would, among other things, ensure that the US armed forces could buy cheaper fuel – cheaper than today’s prices – produced in the USA.  At a time when federal debt is spiraling and the Defense Department is facing budget cuts that are guaranteed to gut the fighting forces and render them ineffective, it seems to border on insane to eschew a ready, significantly cheaper alternative and require the armed services to quadruple what they pay for fuel as a proof of concept – apparently with the idea that the forces should buy more of the 4-times-as-expensive fuel.  This is, after all, our national security we’re talking about.

J.E. Dyer’s articles have appeared at The Green Room, Commentary’s “contentions,Patheos, The Weekly Standard online, and her own blog, The Optimistic Conservative.




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How do we stop this insane waste and still remain strong?

trickychicken on December 11, 2011 at 9:21 PM

In this case, those who purchace for the military, when quoted a price, calls a local gas station and see what the free market price is and negotiate from there. I can tell you without fear of being disproven, a military base will use more fuel than the local BP or Shell station will dispense in the same time period, and the military bases in the U.S. is normally in close proximity of a city full of BP and Shell stations. So cost of delivery is not a problem. I would factor in foriegn prices, but this discussion is not talking about foriegn vendors to the military.

Look at it this way, if you had to pay the same price for a computer that the government/military pays, you probably wouldn’t have one unless you were very well off financially.

Hog Wild on December 11, 2011 at 9:51 PM

astonerii on December 11, 2011 at 7:31 PM

That’s a point I generally agree with. To me, this endeavor, while noble for the fact that it encourages a diversified fuel supply, strikes me as a massive PR move. Moreover, the political ties of Solazyme strikes me as more political cronyism by the Obama administration.
As an aside, can ethanol be used as JP-5 fuel? The biofuel here isn’t made for cars/trucks/etc… If ethanol can be used, then I’d agree that it would be an alternative to the algae-based biofuel. Otherwise, it’s apples and oranges.

Casual_Collector on December 11, 2011 at 9:59 PM

:) where is the link? I know you all are new, but the rules don’t stop or change if someone asks for proof. :)

upinak on December 11, 2011 at 8:43 PM

Here’s an observation that may be useful:

Newly registered accounts are no indication of longevity at this site.

BTW: Where’s the link to the rules you mention, hmmm? I’m asking for proof, per your snark. :)

MTLassen on December 11, 2011 at 10:09 PM

You won’t be surprised to learn that a member of Obama’s presidential transition team, T. J. Glauthier, is a “strategic advisor” at Solazyme…

Nope. Not surprised at all.

iurockhead on December 11, 2011 at 10:41 PM

I doubt the Navy had much of a choice in this. Wonderful..So how much of America will be left come November 2012?

JellyToast on December 11, 2011 at 10:41 PM

Actually – it is worse that than. It is actually paying $12 million for the fuel. That comes to ~$26.66 per gallon. They blend it 50/50 with normal fuel – that is where you get the lower price.

Details and source materiel here.

CDR Salamander on December 11, 2011 at 10:46 PM

Graft, folly, corruption, fraud, incompetence.

Take your pick and ream the stupid s.o.b.’s responsible for criminally wasting taxpayer money on such symbolic imbecilities.

The military is supposed to run more seriously.

profitsbeard on December 11, 2011 at 11:31 PM

Yes, this is a fairly small scale experiment. At least, I hope so. However, in this fiscal environment, with DoD facing $1 Trillion (yes, Trillion with a T) in budget cuts, this is absolutely the wrong thing to be spending money on. I would hate to be the program manager who has to defend this expenditure to Congressional staffers…

Guinness on December 11, 2011 at 11:34 PM

Hey Phib, great to see you here! I read your blog every day.

Guinness on December 11, 2011 at 11:35 PM

“Our use of fossil fuels is a very real threat to our national security”–Navy Secretary Ray Mabus

theperfecteconomist on December 11, 2011 at 7:51 PM

No Link?

upinak on December 11, 2011 at 8:02 PM

It doesn’t matter. Mabus is just another d’ohbama hack – singing from the same green hymnal as all of lil barry’s hacks.
Mabus is the one who has decided that naming ships should be a political thing, too. Naming ships after such people as Cesar Chavez (who hated the Navy and called his service “the worst two years of my life”), John Murtha and Medgar Evers.
Of course Mabus says whatever lil barry wants him to say.

Solaratov on December 11, 2011 at 11:45 PM

Casual_Collector on December 11, 2011 at 9:59 PM

This is not ethanol, it is closer to diesel and made from PIG FAT.

Here is a MILITARY report on the fuel

Kermit on December 11, 2011 at 11:45 PM

One US carrier group uses over 350000 gallons of JP in a day.

One USMC tank battalion uses 350000 gallons of JP in a week.

450000 gallons of bioJP might be enough to run some conclusive tests strategically and tactically important equipment.

Cost of 450000 gallons bioJP: $7.2 million
Cost of F/A18: $55 million

logdogsmith on December 11, 2011 at 11:57 PM


now Solazyme….

obama is icarus and he has certainly flown too close to the sun.

ted c on December 11, 2011 at 9:17 PM

They really like basing names on light, don’t they. Oh, BTW, Lucifer means light-bearer. But I’m sure there’s no connection.

There Goes The Neighborhood on December 12, 2011 at 12:16 AM

Now that’s what I call green (as in greenbacks) energy. The green you see, however, is the taxpayers getting ill.

lonestarleeroy on December 12, 2011 at 12:35 AM

Yeah, you gotta hate those greedy millionaires and billionaires for not paying their fair share. Because if they did then there would be PLENTY of money for the wise use of our government.

MAC1000 on December 12, 2011 at 1:38 AM

On a par with those sixteen dollar muffins.

Me thinks there is a pattern here….

Sherman1864 on December 12, 2011 at 4:55 AM

The Airforce and the NAVY do not use the same fuel for their birds.
NAVY uses JP-5 for safety reasons, the Airforce uses the new JP-8

Bio fules tend to turn back into grease when its cold, Has Obama changed the adiabatic laps rate

adiabatic lapse rate average atmospheric lapse rate results in a
temperature decrease of 3.5°F (1.94°C) per 1,000 feet (304 m) of altitude

DSchoen on December 12, 2011 at 6:14 AM

OMG, $26.66 per gallon?

As my Spanish friends would say

“por que?”

I mean, are we not going broke fast enough that we have to buy fake fuel from O Admin contributors?

BigAlSouth on December 12, 2011 at 7:25 AM

I would change the headline to “Navy is Forced to Buy $16/gal Biofuel”. I’m guessing nobody in the Department wanted to do this.

BBReggie on December 12, 2011 at 7:38 AM

As a former squid I find it appalling the Navy is forced to buy this crap! But the buck stops with the Obama Regime. Just item #9,543,610 illustrating why America needs to kick this Regime to the curb!

insidiator on December 12, 2011 at 7:56 AM

There is really no such thing as a company producing biofuels being able to operate without benefit of the govt.
The very rules Federal & state govts mandate to make biofuels a certain % of their fule requirements has created an artificial demand for this stuff.
Biofuels could survive in a niche market.
I won’t argue that.
Like using leftover cooking oil to drive your car.
That’s a good use for a ‘bio fuel’.
But specifically growing something to convert it into fuel?
Well that product should be grown in a place where it makes sense to do so, where nothing else seems to work for that particular geographic area.
Biofuel in general is always dependent upon the govt, either directly, or indirectly, to remain a viable business option.
At least from what I’ve seen.

Badger40 on December 12, 2011 at 8:00 AM

The idea that spending $16/gallon for bio-diesel is justifiable in terms of being energy-independent might be viable…if we didn’t have vast petroleum reserves in the US that can’t be tapped due to the same people who think $16/gallon bio-diesel is a great idea.

Drill baby, drill.

MidniteRambler on December 12, 2011 at 8:02 AM

I would change the headline to “Navy is Forced to Buy $16/gal Biofuel”. I’m guessing nobody in the Department wanted to do this.

BBReggie on December 12, 2011 at 7:38 AM

I’m sure you’re right.
Reminds me of our little airport in SW ND.
Homeland security FORCED our community to buy, with federal dollars of course, a huge brand spanking super duper new tractor to clear the sunway of snow.
Cost tens of thousands of more dollars than was necessary.
But it was either that or get shut down.

Badger40 on December 12, 2011 at 8:02 AM

It’s just like wind & solar energy.
Some places it might make sense to use it to augment energy requirements.
But with current technology, they should never be a replacement.
They are not reliable enough.

Badger40 on December 12, 2011 at 8:04 AM

and those of us who work in the Defense department wonder why we haven’t gotten a cost of living raise in two, about to be three years.

The Spear on December 12, 2011 at 8:23 AM

Whenever I think it cannot get more stupid, more criminal, this administration releases yet another barrier breaker.

scboy on December 12, 2011 at 8:24 AM

“Government”: W here cheating the tax-payer and passing on the savings to cronies and thieves is not just a job, but a calling.

LizardLips on December 12, 2011 at 8:52 AM

How do we stop this insane waste and still remain strong?

trickychicken on December 11, 2011 at 9:21 PM

Publish “THE RULE”, and then stick to it, with the rule being…

“If you are caught defrauding the US Government by more than 25% of local market prices, your US Tax ID number will be pulled and your business will be banned for operating or selling to the US for a minimum of 5 years.”

dominigan on December 12, 2011 at 9:41 AM

Yippee! I can finally comment at Hot Air! As a long team lurker in the comments, it is great to finally contribute.

This fuel purchase is symptomatic of a complete disdain for the purpose of legitimate government. The regime are nothing but thugs, crony socialists, and purveyors of a perversion of democracy. Chicago Politics on a national scale. God help us if these goons are in power come January 2013

MJScanlonOH on December 12, 2011 at 9:46 AM

Haven’t seen mention of this anywhere but here. Waiting…..

fredebearak on December 12, 2011 at 9:54 AM

Unsurprising. This is primarily the fault of senior level officers trying to get a positive bullet on his Officer Evaluation Form. In this case the contracting officer is given an order and has to carry it out, no matter how stupid the price difference is.

We did similarly stupid things in Iraq. We’d pay upwards of $9000 a load of gravel to spread out on the ground on our Forward Operating Bases (we’re talking hundreds of acres here for each one) – so the FOB wouldn’t become a mudpit hip deep when in rained – to Iraqi tribal sheikhs and local construction companies…except that in the US, the same load of gravel costs about $250.

Essentially our contracting practices paid insurgents to buy guns and bombs to kill our troops.

John_G on December 12, 2011 at 10:53 AM

A report this week from some Government agency indicated that corn supplies were down from last year.
So, instead of eating it let’s just make it into overpriced bio-fuel ti line one of Obama’s crony’s pockets!
Thank goodness Obama has a limo driver. It would be a disaster for him to be driving around because he could not possibly see with his head so far up his posterior.
Geeeeeeeeeezzzzzz and people think texting while driving is bad….

Art on December 12, 2011 at 11:35 AM

Oh my…I am SO ready for November, 2012…

StarLady on December 12, 2011 at 2:09 PM

Hey! I’ve an idea for an energy-sector stimulus: Get the government out of the way!

joated on December 12, 2011 at 4:26 PM

It seems that a federal crime has been committed. Maybe Holder will prosecute if the villains are white. If black panthers did it he would give them permission to sell more and a free pass on prosecution.
Odumba’s anointed idiots are killing our freedom, money system, military, morals and freedom. I bet all have taken their “fair share” of the trillions that has been given away and just plain disappeared.
Wake up America before the Mudslums kill us.

harvey1 on December 12, 2011 at 5:55 PM

Mandated use of $16/gal fuel is not only criminal waste, it is a treasonous attack on our armed forces.

landlines on December 12, 2011 at 7:26 PM

This is just a drop in the bucket if all contract for the last year were checked. Single Source Suppliers are the biggest problem. The purchase is approved below DOD level or Secretary of the Branch (Army, Navy, Air Force, Coast Guard) To many friends in too many places. The spec sheet is another problem. I remember in the 70’s before smoking was stopped in all buildings they kept ash trays all over the place. They cost $10 each, you could by the same ashtray at Walmart for $3.75. The difference came in for two reasons, indifference on the part of the Procurement Manager and the twenty-five page Spec Sheet that required all kinds of test. It even specified the size of pieces if the ash tray were dropped and broken. I would figure they used Single Source based on the assumption that no other company could supply the large quantity in as short a time. Then the total indifference of the Procurement Staff who just accepted the price and never ask a question. There is so much excess equipment in storage around the world that another entire Army could be supplied and sustained for six month in heavy combat. Why???? When a unit stands down they can not return to the States until all equipment is accounted for. If they have excess then the real owner has to be located or something done with the equipment. When pulling out of Vietnam there were Helicopters, tanks, armored personnel carriers and lots and lots of spare parts buried after stripping all classified equipment and blowing them up. No telling how much money was lost because of poor paper trail from the depot in the States to the Unit in the Field. SO, getting upset about the price the Navy paid for Bio Fuel, is like shooting a Grizzly bear with a BB gun, you just scratch the surface and don’t hurt a thing.

old war horse on December 13, 2011 at 12:33 AM