7/03/2012

How to make the US much poorer: Military “green fuel” costs nearly seven times more than conventional fuel

US military spends a lot on fuel.
Last year, the U.S. military spent approximately $15 billion on fuel for its operations . . .
OK, so the solution is to buy something that costs seven times more?  From Fox News.

The Navy is steaming ahead with an initiative to power ships with biofuel, despite criticism the so-called “green fuel” costs nearly seven times more than conventional fuel.
This month marks the first time the Navy is using biofuel in an operational setting -- sending five ships to a multi-nation exercise off the coast of Hawaii.
A Navy official told FoxNews.com on Monday that sailing the so-called “Great Green Fleet” this month on the 50-50 blend of alternative and conventional fuel is part of Navy Secretary Ray Mabus’ plan to have half the Navy fleet on alternative fuel by 2020.
The spokesman also confirmed the fuel -- which does not require engine modifications -- costs $26 a gallon compared to $3.60 a gallon for conventional fuel.
However, he pointed out the cost was for a one-day supply and that prices will drop when the Pentagon, among the country’s biggest fuel users, buys more.
Capitol Hill Republicans have been among the biggest critics of the plan -- questioning the fuel's cost and President Obama's alternative-energy initiatives as either not ready or too expensive for the marketplace.
They point to the government-funded Solyndra solar panel company going bankrupt as a cautionary tale.
"I don't believe it's the job of the Navy to be involved in building ... new technologies. I don't believe we can afford it," said Arizona Sen. John McCain, the ranking Republican on the Senate Armed Services Committee, according to Reuters. . . .
Sure there are concerns about oil supply reductions during a war, but the price of oil already incorporates that risk, or at least the part of that risk that isn't interfered with by the threat of government price controls.  The current price is the future expected price.  So that gives you an idea of what the costs of storing oil might be.  The cost of storing oil per barrel in 1985 was $1.3/barrel/year (p. 27).  In today's dollars, that is about $2.60/barrel/year.

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