Not to worry: DoD still buying $59/gallon “green” jet fuel, despite sequester

posted at 3:21 pm on May 3, 2013 by Erika Johnsen

The Obama administration has rarely passed up an opportunity to continue their relentless subsidization of the biofuels industry — the EPA has lately been particularly defensive about their requirement that fuel producers mix part of their product with certain non-existent cellulosic biofuels, to several lawmakers’ chagrin — and the Obama administration even has the Pentagon ‘doing their part’ to create an artificially inflated market for their politically preferred brand of biofuels (they get to both cater to their cronyish interests, and get some spectacular “green” PR, all at the same time!). The U.S. military has been working on their “great green fleet” plans for awhile now, and despite the fact that their anointed choice of biofuels is at least several times more expensive than their traditional fuels, they apparently don’t have any plans to scrap the initiative. Sequester? What sequester? H/t Joel Gehrke:

“In March, Gevo entered into a contract with the Defense Logistics Agency to supply the U.S. Army with 3,650 gallons of renewable jet fuel to be delivered by the second quarter of 2013,” Gevo announced this week in its first quarter financial report. “This initial order may be increased by 12,500 gallons. All shipments will be at a fixed price of $59 per gallon during the initial testing phase. These shipments are in addition to the renewable jet fuel supplied to the U.S. Air Force (USAF) and the U.S. Navy (USN).”

And what’s the going rate for most of the standard jet fuel, you might ask? That would be less than four dollars a gallon. …So, the Pentagon was ‘forced’ to ground the Blue Angels because of sequestration, but we can somehow afford political stunts like this?

Proponents of the idea of the U.S. military spending more money on ostensibly “green” fuels have a number of arguments they use to justify their case: That the volatility of conventional fuel prices means that the military’s costs are dangerously subject to price swings; that integrating more biofuels will guard against possible supply disruptions; that the military can help spur development of these new technologies that we as a society really-super-cereal need; and that new technologies will somehow help make the military more energy efficient and enhance performance.

Hogwash, all of ‘em, as Kenneth Green aptly explained last summer:

Virtually none of these arguments pass a laugh test. Yes, when conventional fuels rise in price, military operating costs go up. But in a global fuel market, the market value of any liquid fuel will track with the world price of oil on an energy-content basis. Simply switching to biofuels offers no price protection in a world of fuel-fungibility. Analysts at Rand put it quite succinctly in a recent report. “Alternative liquid fuels do not offer DoD a way to appreciably reduce fuel costs.”

As to the risk of a supply interruption, we don’t face one: Rand further observes, while the U.S. military uses a lot of fuel, when looked at in context, it uses a tiny percentage of world, or even North American production. Its consumption is less than one-half of 1 percent of global petroleum demand. The U.S. also produces over 8 million barrels a day. “we can find no credible scenario in which the military would be unable to access the 340,000 bpd of fuel it needs to defend the nation,” says Rand. And, of course, there’s that whole Strategic Petroleum Reserve, which can hold 727 million barrels of oil. Let’s see, 727 million divided by 340,000…the SPR could power the military by itself for almost 6 years.

With regard to the early adopter idea, one would have thought that people would be wary of such arguments. Back in 2007, President Bush made this same argument when his administration implemented a requirement that the country blend in 17 million barrels of ethanol made from cellulose, the technology which did not exist at the time. And it still doesn’t – 5 years later, there is no cellulosic-ethanol production at virtually any price. …

None of these are really sound arguments; they’re just assuring-sounding excuses meant to provide political cover for another indirect biofuel-industry subsidy and the Obama administration’s oh-so-august attempts to be “green” — especially not when SecDef Chuck Hagel has said that the sequestration will lead to “reductions of up to $41 billion, $41 billion that will lead to the suspension of important activities, curtailed training, and could result in furloughs of civilian personnel.” So glad to know the Obama administration has our best national interests at heart, no?


Related Posts:

Breaking on Hot Air

Blowback

Note from Hot Air management: This section is for comments from Hot Air's community of registered readers. Please don't assume that Hot Air management agrees with or otherwise endorses any particular comment just because we let it stand. A reminder: Anyone who fails to comply with our terms of use may lose their posting privilege.

Trackbacks/Pings

Trackback URL

Comments

So glad to know the Obama administration has our best national interests at heart, no?

No. Of course our best national interests are never in his heart and mind. Only his and his cronies best interests. And our nations destruction.

hawkeye54 on May 3, 2013 at 3:25 PM

…waste not…want not?

KOOLAID2 on May 3, 2013 at 3:25 PM

When a jet flies over, money should rain down out of the skies.

trigon on May 3, 2013 at 3:26 PM

“In March, Gevo entered into a contract with the Defense Logistics Agency to supply the U.S. Army with 3,650 gallons of renewable jet fuel

So how much is Hussein’s share of the kickbacks ?

burrata on May 3, 2013 at 3:26 PM

DOD = Department of Dimwits.

VorDaj on May 3, 2013 at 3:28 PM

As a businessperson, this kind of crap makes me crazy. Seriously, who’s stupid enough to do this? After it’s exposed, why are there not a solid majority willing to put a stop to it immediately?

This thing, right here, is exactly why we’re going down the tubes as a country. The simple inability to see that something is wrong and stop it.

trigon on May 3, 2013 at 3:30 PM

Hey can kids visit the WH or is it still closed for them ?

burrata on May 3, 2013 at 3:33 PM

This thing, right here, is exactly why we’re going down the tubes as a country. The simple inability to see that something is wrong and stop it.

trigon on May 3, 2013 at 3:30 PM

Their excuse will be, that it will cost more to cancel the contract then go thru with it.

RickB on May 3, 2013 at 3:34 PM

The Obama administration has rarely passed up an opportunity to continue their relentless subsidization of the biofuels industry democrat campaign contributors

VorDaj on May 3, 2013 at 3:35 PM

All the global warming fraudsters need to be drowned in $59/gallon green liquid.

ThePrimordialOrderedPair on May 3, 2013 at 3:36 PM

What, couldn’t find an older picture of an aircraft carrier for the article?

Zaggs on May 3, 2013 at 3:36 PM

But how much does our military spend to get green fuel for the Russian fleet that figured so prominently at the Dem convention?

ThePrimordialOrderedPair on May 3, 2013 at 3:41 PM

It’s almost like they are trying to destroy our currency.

trs on May 3, 2013 at 3:42 PM

Will this is disheartening …. it is plain that those that commented with such droll aplomb above are in fact the idiots that do not understand the way DoD Contracting works ( as well as the author of the article ).

Things move pretty glacially in DoD Contracting. One has to POM (plan of action and milestones ) for a given years money from one to three year cycles years in advance of when the money is obtained or spent. Depending on when the contracts for the fuel were let is a factor in determing what price is payed for the freaking fuel.

But, don’t let little things like facts get in your way …

The follow up story would be to investigate via FOIA what contract was in place and if anything was being done to mod the contract to mitigate the effects of the sequestor … but hey that would be the sensible thing to do …

It’s just too easy to pile on the DoD … *eye roll at commenters with a little double piccard face palm too boot!* :P

Cadian on May 3, 2013 at 3:44 PM

What, couldn’t find an older picture of an aircraft carrier for the article?

Zaggs on May 3, 2013 at 3:36 PM

Ya – not sure because of the resolution when I try to blow it up, but I think there are F-4 Phantoms on the flight deck. That would make the photo mid 80s at the latest.
Definitely an older model carrier as well.

dentarthurdent on May 3, 2013 at 3:47 PM

Hopefully all the heads of the stupid gov’t creatures spontaneously combust, from dereliction of duty.

Schadenfreude on May 3, 2013 at 3:49 PM

As we all know, it ain’t your daddy’s DOD anymore. Or your daddy’s (insert branch of service here). They’re all run by ultra-liberal civilian proggies edumacated in elite halls of higher ‘education’.

The same thing is happening in the officer corps… all the service academies are run by the same lib proggies, and any officer wishing to rise above O-2 has to wholly, completely embrace the lib proggie mindset. Don’t be thinking there’ll be any closet conservatives, either.. they have ways to smoke ‘em out.

Marcola on May 3, 2013 at 3:56 PM

Cadian on May 3, 2013 at 3:44 PM

Depends on what kind of contract is awarded. If it’s an IDIQ, the Navy can choose to stop buying under that contract at any time.
Judging from the articles I’ve found, this one below, appears to have been a fixed price one time delivery of 450K gallons of biofuel awarded in 2011 for delivery in 2012.

However, it appears that the civilian leadership at the Pentagon, appointed by Obama, wants to push us down the overly expensive “green energy” path.

http://solazyme.com/media/2011-12-05

“Solazyme is honored to be working with the U.S. Navy and DLA-Energy in driving forward the Navy’s effort under Secretary Ray Mabus to source 50 percent of its energy from renewable sources by 2020.”

dentarthurdent on May 3, 2013 at 4:00 PM

The spot price of jet fuel as of 29 April was $2.76/gal. That is $.59/gal LESS THEN I just paid to fill up my Cheve to go to work in.

jpcpt03 on May 3, 2013 at 4:04 PM

All shipments will be at a fixed price of $59 per gallon during the initial testing phase.

All agreement with the technicalities of the complaints aside (certainly it’s more attractive to point to this program rather than the more public spectacle of grounding flight demonstration teams), it isn’t the final price, and the reason for the price is because it is for a vanishingly small quantity compared to all the fuel the Defense Fuel Supply Center handles. If it progresses past the ‘initial testing phase’ through formal testing to normal use, the price will drop drastically.

The same thing is happening in the officer corps… all the service academies are run by the same lib proggies, and any officer wishing to rise above O-2 has to wholly, completely embrace the lib proggie mindset. Don’t be thinking there’ll be any closet conservatives, either.. they have ways to smoke ‘em out.

Marcola on May 3, 2013 at 3:56 PM

As a graduate of one of them, I assure you this isn’t the case. And the disconnect happens at a much higher grade…the O-5 level is obtainable for anyone who performs well regardless of their adherence to a particular mindset.

James on May 3, 2013 at 4:12 PM

The same thing is happening in the officer corps… all the service academies are run by the same lib proggies, and any officer wishing to rise above O-2 has to wholly, completely embrace the lib proggie mindset. Don’t be thinking there’ll be any closet conservatives, either.. they have ways to smoke ‘em out.

Marcola on May 3, 2013 at 3:56 PM

As a graduate of one of them, I assure you this isn’t the case. And the disconnect happens at a much higher grade…the O-5 level is obtainable for anyone who performs well regardless of their adherence to a particular mindset.

James on May 3, 2013 at 4:12 PM

Ya – I have to call BS on Marcola too. I’m also a grad from one of the military’s “trade schools”. The majority of academy grads are absolutely NOT liberals – far from it. But wherever you might have gotten your commission, at the general officer level politics does come into play much more if you want to get to the top.

dentarthurdent on May 3, 2013 at 4:17 PM

These are smarter than the gov’t creatures.

Schadenfreude on May 3, 2013 at 4:28 PM

After thinking more about this and doing a bit more research., I think that it can not really be said if this $59.00/gal is that bad. We do not know the terms of the contract, we are comparing the spot pries as of today with a contract that was set up nearly 2 years ago . These are experimental trial blends made to military specifications for specific testing. If the DOD starts buying all it’s fuel needs at $59.00/gal that is a different story.

jpcpt03 on May 3, 2013 at 4:29 PM

Ya – not sure because of the resolution when I try to blow it up, but I think there are F-4 Phantoms on the flight deck. That would make the photo mid 80s at the latest.
Definitely an older model carrier as well.

dentarthurdent on May 3, 2013 at 3:47 PM

Those look like A-3 Whales sitting aft of the island, and A-4 Scooters for’ard starboard. From the size relative to the deck space, and the bow, I’m guessing Midway, FDR, or Coral Sea. And from the paint schemes, no later than the mid-Seventies (no low-vis grey in evidence).

cheers

eon

eon on May 3, 2013 at 4:47 PM

59 bucks a gallon is pretty much the equivalent of a decent $12 bottle of Cabernet.

Maybe we could get them to run on Two Buck Chuck.

trigon on May 3, 2013 at 4:54 PM

The effects of climate change may:

“Act as accelerants of instability or conflict in parts of the world …”

it may also cause blindness and an erection lasting longer than 4 hours

J_Crater on May 3, 2013 at 4:56 PM

This is why I’m no longer one of those conservatives that screams bloody murder whenever we talk about making cuts to the defense department.

There’s a lot of waste, fraud, and abuse that goes on with our military, and it needs to be cut just like any other department.

BradTank on May 3, 2013 at 5:18 PM

“This initial order may be increased by 12,500 gallons. All shipments will be at a fixed price of $59 per gallon during the initial testing phase. These shipments are in addition to the renewable jet fuel supplied to the U.S. Air Force (USAF) and the U.S. Navy (USN).”

Just imagine the fuel cost to DoD if Air Force One used this fuel.

We would have to close Iowa to pay for it.

BobMbx on May 3, 2013 at 5:50 PM

Let’s remember this the next time some lib compares US ‘defense’ spending with that of other countries. Add to this every office in the Pentagon that contains the word ‘diversity’.

You can bet our enemies get a lot more for their money than we do.

slickwillie2001 on May 3, 2013 at 5:54 PM

Weird to say, but the GOP needs to take a page out of UKIP’s playbook for messaging on green policy.

theperfecteconomist on May 3, 2013 at 6:48 PM

Our congress is totally, totally, incompetent. The country is all but lost.

ultracon on May 3, 2013 at 7:36 PM

Wait! There’s a St. Patty’s Day fuel now?

@AsalamaTweetum

Opinionnation on May 3, 2013 at 8:05 PM

Why do we pay $16+ for a gallon of 100LL aviation fuel because it’s OCONUS (outside the continental US)?

danielreyes on May 3, 2013 at 8:16 PM

For that matter, why do we pay $8.15, for any avgas non contract? Spot price for 100LL is just over $6.

danielreyes on May 3, 2013 at 8:20 PM

Who is the Obama bundler(s) who got the contract(s) to sell “bio fuel” to the Navy?

In a rational age, there’d have been indictments and convictions already.

coldwarrior on May 4, 2013 at 7:53 AM

Let’s make this simple. Wait til the first of several 54 million dollar jets sputters on takeoff or landing and crashes into the aircraft carrier, or just falls out of the sky like a pile of lead poop!

THEN the coverup will start, but somebody will say something to somebody and hopefully they’ll stop.

Or not. Other people’s lives and fortunes just don’t matter to Obama and his ilk.

Psychotic.

archer52 on May 4, 2013 at 10:47 AM

Follow money, who benefits from sale of this fuel?

losarkos on May 4, 2013 at 11:51 AM

That’s nothing. Recycled snot-booger fuel costs $159 a gallon.

AshleyTKing on May 4, 2013 at 11:34 PM

12,500 gallons times 59 dollars per gallon = $737,500

Why am I supposed to get excited about this again? This is mostly a research project. The DoD is messing around with some bio fuel guys to see if they can get some fuel flexibility in the event that they can’t get access to traditional sources.

The cost of this stuff is coming down quickly and at some point in the future it might actually be cheaper to grow the fuel rather then drill for it.

What is 737 thousand dollars to the US military? What does that even buy anymore? This is cheap.

Don’t get me wrong… I’m not a fan of the stupid green projects the asshat democrats have pushed.

That said, not all of them are bad. This one is very limited and is more about R&D then it is about actual investment.

Furthermore, the military was also playing around with “green” explosives. The idea was basically non-toxic no heavy metal high explosives. That has political consequences. The military takes heat for using some weapons in battlefields. Remember the whole depleted uranium thing? Well if you use green explosives that’s one more thing you don’t have to worry about after the war. It pays for itself.

Obviously all of this has to be limited to what is practical and what doesn’t interfere with the military’s mission. But not all of this is stupid.

And some of it might actually let the military operate more independently from our supply chain. A company is trialing a water collection system in Afghanistan for the military. It’s a big machine about the size of a shipping container which if provided power can pull all the water a small base needs out of the air. That’s huge if the base is in a place where there is no well water and all water would have to be trucked or even air lifted to the base.

Think 59 dollar a gallon gas is expensive? Try 59 dollar a gallon water. And then how do you power all this stuff? Fly in gasoline? That’s fine for a few battles. But if a base is just going to sit there for decades you probably want a more efficient solution. Which is where things like solar actually start making financial sense. Is solar as efficient as coal? Nope. But its more efficient then trucking diesel fuel through enemy ridden mountains with IDEs all over the place only to run a generator for little things like “lights” and cooked food.

Look… I get where the push back is coming from. I really do. But in this case the military isn’t the enemy here. They’re just finding something useful amongst the nonsense.

Karmashock on May 5, 2013 at 8:51 AM

When political correctness replaced common sense it put the country in peril. There is no excuse for all this stupidity.

savage24 on May 5, 2013 at 9:48 AM

Nothingburger in the realm of religious freedom? Really, Ed, you could not be more disappointing. How about the fact the Pentagon called in a guy who equates proselytizing with “rape” and “sedition”?

That says nothing about our leaders, their collectivist mindset, and view of religion in general?

At time when the military is having trouble with ACTUAL rape and ACTUAL sedition, they call in this bomb-thrower Mikey Weinstein to lecture the military on fairness and tolerance?

I suspect someone has some photos you would rather not see the light of day…

StubbleSpark on May 9, 2013 at 7:30 PM