Thomas Pyle is the president of the Institute for Energy Research.
This week, the Navy embarked on a costly and pointless exercise—using "advanced" biofuels that cost $26 per galon in some naval exercises. At a time when the federal budget and military budgets are tight, Navy Secretary Ray Mabus claims that it is important to spend millions of dollars on an exotic biofuel to "enhance our national security." That is ridiculous. Spending $26 a gallon on exotic biofuel does not "enhance natural security" as it reduces our security by wasting taxpayer's dollars on yet another renewable boondoggle and diverts funds from necessary readiness.
Nonetheless, Mabus has ordered naval exercises in the Pacific using "advanced" biofuel. The Navy will be running a fleet of warships, including the accompanying jet planes and helicopters, on a 50-50 mixture of conventional fuel and biofuel. The fuel for this exercise cost the Navy around $12 million, but that is just a small portion of what the Obama administration has spent and will spend on the development of biofuels technology.
Over the past three years, this administration has spent $1 billion to research and develop these fuels partly by investing in bio-refinery projects. In fact, these biofuel projects are part of a larger $510 million joint agency initiative between the Agriculture, Energy, and Navy Departments to invest in so-called drop-in commercial biofuels.
The Navy has a contract with Dynamic Fuels LLC and Solazyme, Inc. who will be providing fuel made from chicken fat and algae oil, respectively. The Navy claims that buying fuel from chicken fat and algae protects national security by reduce our dependence on the volatile global oil market. Their argument might make a modicum of sense if oil prices were $1,000 a barrel, but oil "only" costs $100 a barrel. (A barrel of oil is 42 gallons and this biofuel is $26 a gallon, therefore $26 a gallons x 42 gallons = $1,092 a barrel.)
Even with the volatility in the oil market, oil is nowhere near the $1,000 a barrel of these exotic biofuels. Instead, Brent Crude Oil is hovering around $100 and West Texas Intermediate is $86 a barrel. There is little reason to believe that these biofuels will cost near what oil costs in any foreseeable future. That's because biofuel is old technology. Some of the first automobiles, as in the ones made in the 1800s, ran on ethanol and other biofuels and during World War I, a commercial cellulosic ethanol plant was operating in the United States. But biofuel production declined over time not because it was new, but because it was inefficient, expensive, and ultimately unsustainable.
It is no surprise that it appears that there might be more behind this biofuel initiative than national security. A federal biofuel advisory committee that serves multiple government agencies in the development of biofuels is comprised of numerous individuals who work in the green energy industries themselves, including members of the aforementioned Solazyme Inc. Harrison Dillon, the cofounder and president of Solazyme Inc., and Robert Ames, the vice president of fuels and commercialization of Solazyme Inc., both serve on the biofuel advisory committee. This is an inexcusable example of government cronyism and raises serious doubt about the legitimacy of this initiative. On top of this, Mabus has not been able to produce any type of outline that explains the ultimate costs and the time for such a project. This has led to bills in both the House and Senate currently limiting this effort by restricting the purchase of alternative fuels if they cost more than conventional oil, except for in research and development projects such as this one. Despite reality, the Navy claims that by 2016 it will have a fully functioning "Great Green Fleet," and by 2020 to have half of all naval travel running on these biofuels.
At $26 a gallon, this biofuel costs around six times more than conventional fuel. Even after being mixed with conventional fuel the price is still around $15 a gallon. The Navy has spent $12 million for 450,000 gallons of this biofuel just for the upcoming exhibition. That same $12 million could have purchased over three million gallons of conventional fuel. Despite these numbers, Mabus has claimed, "I think we cannot afford not to do this."
Mabus' statement is utterly ridiculous and reflects an absolute lack of understanding of America, and the world's, energy realities. People have been working on biofuel for over 125 years and they are still incredibly expensive. The United States has large oil resources—enough for 200 years in fact at prices well below $26 a gallon. Why Mabus would rather the federal government go further in debt by paying for expensive fuels instead of using Americans resources is not at all clear.
Because the Navy is showing a disregard for taxpayer dollars or national security, the Institute for Energy Research this week sent letters to Congress calling for an "immediate, exhausting, and unyielding investigation" into this blatant abuse. We asked them to review the Navy's partnerships with the companies involved, as these deals have obviously been made due to factors other than national security and energy independence.
We also wrote a letter to Mabus asking what the Navy has against domestic oil production. The United States has the largest oil, coal, and natural gas resources in the world. Much of these resources are on federal lands, but instead of promoting access to this fuel, Mabus is spending $26 a gallon on exotic biofuel. We asked Mabus to consider the facts about America's energy situation, cease publication of specious claims about American energy resources, and to return to the Navy's core mission of protecting national security.
With the uncertainty in the Middle East it is possible that oil prices could rise again, but even if the Straits of Hormuz were closed, it is unlikely that the price of oil would reach the dizzying costs of Mabus's $26 a gallon biofuel boondoggle. For that to happen, oil would need to cost well in excess of $1,000 a barrel. There is just no rational explanation of how spending on biofuel this expensive will actually improve national security. If Mabus were truly serious about increasing national security, he should look at America and Canada's plentiful energy resources.