Senator Inhofe: 9x Cost for Biofuels Is Too Much, but 29x Was OK for Synthetic Fuels

Jim Lane

Arch-critic of the cost of military biofuels Oklahoma Senator James Inhofe comes under scrutiny over earmarks for natural gas-based military fuels that cost 29 times more than conventional fuels.

In Washington, the battle over advanced military biofuels took a turn for the bizarre this week, amidst revelations that a leading Senate sponsor of legislation to restrict Navy purchases of advanced biofuels, James Inhofe of Oklahoma, had previously secured earmarks for Syntroleum Corporation (SYNM) to produce natural gas-to-liquid alternative fuels which were priced 29 times higher than conventional fuels.

Overall, Syntroleum reported receiving nearly $6 million from 2002, 2004 and 2006 joint development contracts with DoD, stemming from the earmarks by Inhofe. Syntroleum also reported a 2006 contract for $2.3 million for the sale of 104,000 gallons of gas-to-liquid jet fuel to DoD, for testing in Oklahoma-based B52s.

According to the most recent disclosures at opensecrets.org, Senator Inhofe is an investor in BlackRock, which is the largest shareholder in Syntroleum as of March 31, according to SEC filings, through BlackRock Institutional Trust and BlackRock Fund Advisors.

Paying 29 times for natural gas fuels than conventional fuels

Adjusting for inflation, the $2.3 million contract in 2002 dollars equates to $2.93 million in today’s dollars, or $28.21 per gallon. Back in 2002, jet fuel was selling at considerably less than today – at an average price of 75 cents per gallon in the second half of the year, according to indexmundi.com.

Overall, the cost of the natural gas-based alternative fuel was 29 times more than the cost of conventional fuels at the time, and cost more, per gallon, in today’s dollars than the Navy’s advanced biofuels program.

At the time, the Senator said “Syntroleum’s gas-to-liquids barge project holds great promise for alternative fuel production in a way that has both civilian and military applications. The benefits of this kind of technology to our country are substantial and I am confident that these funds will aid in the further development of this process for the benefit of our nation.”

The Senator took a different line on the benefits of the military advanced biofuels program.

“A fiscally responsible amendment that I authored in the FY13 NDAA,” he wrote, “prohibits the DOD from purchasing high-cost alternative fuels if traditional fuels are cheaper. I pledge to continue working with my colleagues to ensure that President Obama’s far left agenda does not impact military readiness and our national security.”

In a letter to Navy Secretary Ray Mabus last week, Inhofe wrote, “requiring the Navy to spend exorbitant amounts of an already stretched budget on alternative fuels is impacting our near and long term readiness.”

Alternative fuels: good for military readiness then, bad for military readiness now

At the time of the initial $3.5 million grant to Syntroleum to develop alternative fuels from natural gas, Inhofe took a different line on the impact that developing alternative fuels would have on military readiness and national security.

“Tulsans can be very proud that Syntroleum’s advanced technology is now poised to make a significantly increased contribution to military readiness and national security,” Inhofe said at the time of the 2002 award. “I especially applaud all the workers at this company. Their efforts have been recognized, and their future endeavors are going to make a real difference for America.”

By 2012, Senator Inhofe was no longer applauding all the workers at the company, and predicting that their future endeavors would make a real difference for America.

One of Syntroleum’s future endeavors, as it happens, is its Dynamic Fuels joint venture with Tyson Foods that won the Navy contract for advanced alternative biofuels that attracted such strong criticism from the Senator.

“Sen. Inhofe’s concern in this particular case as it deals with the Department of Defense is that the alternative is cost prohibitive,” Inhofe spokesman Jared Young told CNSNews.com last December. “The Department of Defense should not purchase alternative fuels that are priced 9 time higher than conventional fuels –$26.75 per gallon to approximately $2.85 per gallon because those extra costs will further eat away at other necessary budget items such as operations, maintenance, training, and modernization.”

The program for Syntroleum’s proposed Flexible JP-8 (single battlefield fuel) Pilot Plant program was remarkably similar in structure to the advanced biofuels program later undertaken by the US Navy with Dynamic Fuels. Joint development grants were given to the company to design a marine-based fuel-production plant, and funding was provided to test synthetically-made (gas-to-liquids) JP-8 fuel in military diesel and turbine engine applications, and a production contract for small batches of alternative fuels was issued to the company.

The bottom line

Well, clearly there’s a credibility gap here.

There seems to be ample evidence that Senator Inhofe is intimately aware of the costs of developing and testing alternative fuels in small quantities. It appears to be a simple case of playing political games, by criticizing Dynamic Fuels for selling advanced biofuels for $26 per gallon, when the Senator himself won an earmark requiring the military to purchase even more expensive natural gas-based fuels from Dynamic’s parent.

Paying nine times as much for test quantities of advanced biofuels? “Far-left agenda.”

Paying 29 times as much for test quantities of alternatives to fossil fuels made from, ahem, more fossil fuels? “A real difference for America.”

Hmm.

Disclosure: None.

Jim Lane is editor and publisher  of Biofuels Digest where this article was originally published. Biofuels Digest is the most widely read  Biofuels daily read by 14,000+ organizations. Subscribe here.