Report: Pentagon Paid $150 Per Gallon for Green Jet Fuel

 Report: Pentagon Paid $150 Per Gallon for Green Jet Fuel

GAO report notes exorbitant prices act as de facto subsidy for biofuel firms

BY: Lachlan Markay
May 7, 2014 3:26 pm

The Department of Defense (DOD) paid $150 per gallon for alternative jet fuel made from algae, more than 64 times the current market price for standard carbon-based fuels, according to a report released on Wednesday.

The Government Accountability Office (GAO) noted in its report that a Pentagon official reported paying “about $150 per gallon for 1,500 gallons of alternative jet fuel derived from algal oil.”

GAO’s report examined the financial challenges facing increased purchases and use of alternative jet fuels by federal agencies. “Currently, the price for alternative jet fuels exceeds that of conventional jet fuel,” the report noted.

The price for conventional jet fuel is currently $2.88 per gallon. GAO’s report reveals that federal agencies have paid significantly higher prices in an effort to promote biofuels in commercial and military aviation.

“Of the two alternative jet-fuel production processes approved for use in commercial and military aircraft (Fischer-Tropsch and HEFA), DOD, according to a DOD official, paid from about $3 to $150 per gallon,” GAO reported.

HEFA is an acronym for Hydroprocessed Esters and Fatty Acids, and refers to “renewable oil (e.g., vegetable oils, animal fat, waste grease, and algae oil) … processed using hydrogen treatment (hydroprocessing) to yield a fuel in the distillation range of jet fuel and diesel.”

GAO interviewed 23 “academic, federal government, and private industry stakeholders” about challenges facing the increased adoption of alternative jet fuels. Twenty-two of them cited the fuels’ exorbitant costs.

“Five of these stakeholders noted that for fuel produced using the HEFA production process, the cost of some types of feedstock—even before it is transported or converted—currently exceeds that of conventional fuel,” the report says.

HEFA and other alternative jet fuels are currently produced in large measure by small firms that do not have the economies of scale to manufacture them in a cost-effective way.

To address that problem, federal agencies have been buying extremely expensive alternative fuels as a means of subsidizing those firms.

“Some stakeholders (5 of 23) elaborated that since most fuel producers are generally companies with limited funds and small-scale operations, it is extremely costly for them to produce fuel in large quantities,” the report noted.

Purchasing HEFA fuels, some stakeholders said, would allow those businesses to grow their operations and, eventually, market alternative jet fuels at a lower price.

However, those HEFA fuels will still need to be subsidized to be competitive, GAO noted, citing a recent Federal Aviation Administration study.

“Alternative jet fuels produced on a commercial scale using the HEFA process would require a subsidy of $0.35 to $2.86 per gallon to be price-competitive with conventional jet fuels in 2020,” the report found.

The Pentagon has previously come under fire for paying exorbitant prices for aviation biofuels.

Reuters reported in 2012 that the Air Force had purchased 11,000 of alcohol-based jet fuel for $59 per gallon from a Colorado-based biofuel company.

That company, Gevo Inc., was backed financially by high-dollar Democratic donor Vinod Khosla, who has invested in a number of companies that have received federal support from the Obama administration.

A week before that story broke, the Navy spent $26 per gallon to fuel its Great Green Fleet during the 2012 Rim of the Pacific exercise.

The $150-per-gallon DOD reportedly paid for HEFA fuels would dwarf those previous purchases, which came under fire from critics of the Obama administration’s green energy push.

“Though some energy technologies that are too expensive for general civilian use may make sense for the military, biofuels are not among them,” wrote Heritage Foundation senior energy policy analyst David Kreutzer in 2012.

“The military needs to rethink its biofuels program.”

Lois Lerner Approved Charity Status For Liberal Grammy Awards’ Nonprofit Wing

Lois Lerner Approved Charity Status For Liberal Grammy Awards’ Nonprofit Wing

With just hours to go until ex-IRS official Lois Lerner gets held in contempt of Congress, let’s check in on the debunked Democratic talking point that Lerner also targeted progressive groups.

Lerner approved public charity status for the foundation housed in the same Los Angeles office and headed by the same executive as the uber-liberal organization that gives out the Grammy awards. Lerner approved the status in 2011, according to a letter from Lerner obtained by The Daily Caller.

“Based on information you provided, we have determined that you meet the requirements for classification as a public charity. … We have updated your public charity status in our records as you have requested,” Lerner wrote to The NARAS Foundation, informally known as The Grammy Foundation, in a Feb. 4, 2011 letter.

Lerner approved the Grammy Foundation’s public charity status while the targeting of conservative groups was well underway. The Grammys organization routinely meets with lawmakers at its annual “Grammys on the Hill” event, where it pushes its view on copyright issues and other political issues related to the recording industry.

Huffington Post blogger Neil Portnow is the head of both the Recording Academy, which gives out the Grammy awards, and also the Grammy Foundation. Both organizations are housed at 3030 Olympic Boulevard in Los Angeles.

Longtime Recording Academy member and songwriter George Johnson told TheDC that the Grammys organization is extremely progressive. “They want to keep it progressive. Their ideology is they’re Obama people,” Johnson said.

The Recording Academy’s chief advocacy officer Daryl Friedman “screamed” at Johnson for speaking with Republican Rep. Jason Chaffetz about copyright issues and prevented Johnson, who disagrees with the Academy’s position on copyright issues, from meeting with Republican politicians at a recent Grammys on the Hill event.

“I met Rand Paul one time just for a minute at one of his dad’s rallies. I like what hes doing and I’m a Republican independent conservative libertarian,” Johnson said, claiming that he told Recording Academy leadership about his support for Paul. “As soon as I mentioned Rand Paul, [Recording Academy chief advocacy officer] Daryl P. Friedman sent me an email not to contact anyone at the Grammys on the Hill event.”

The Recording Academy and the Grammy Foundation did not return requests for comment for this report.

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Politics GOP Lawmakers Say They’re Furious After Discovering What Was ‘Hidden’ Inside Budget They Voted For

 Politics GOP Lawmakers Say They’re Furious After Discovering What Was ‘Hidden’ Inside Budget They Voted For

If you are going to vote in favor of a piece of legislation, make sure you read the bill first.
NY Gov. Andrew Cuomo addresses the audience during the NY Safe Act signing ceremony at City Hall in Rochester Wednesday, Jan. 16, 2013. Cuomo signed into law on Tuesday legislation that tightens a ban on assault-style rifles, calls for background checks on ammunition purchases, outlaws large-capacity magazines and tries to keep guns out of the hands of mentally ill people deemed to be a threat. (AP Photo/Democrat & Chronicle, Shawn Dowd)

NY Gov. Andrew Cuomo addresses the audience during the NY Safe Act signing ceremony at City Hall in Rochester Wednesday, Jan. 16, 2013. Cuomo signed into law on Tuesday legislation that tightens a ban on assault-style rifles, calls for background checks on ammunition purchases, outlaws large-capacity magazines and tries to keep guns out of the hands of mentally ill people deemed to be a threat. (AP Photo/Democrat & Chronicle, Shawn Dowd)

That’s the lesson GOP lawmakers in New York reportedly learned after they voted in favor of a proposed state budget that includes millions of dollars in funding for the state’s hastily-passed gun control law known as the SAFE Act.

Hidden in the budget is a provision that permits the reappropriation of $28 million to fund a gun database and $3.2 million in new funding for SAFE Act “staff,” the New York Post reports.

One GOP senator, who asked to remain anonymous, said lawmakers were “told there was no dining for it.” He said he would’ve voted against it if he knew about the SAFE Act funding.

“Several Assembly GOP lawmakers said they knew only about the gun-law funding after a state Budget Division briefing,” the Post adds.

However, the New York State Rifle & Pistol Association hit back on Tuesday, claiming that Republicans knew exactly what was in the budget.

“The Assembly openly debated SAFE Act funding on the chamber floor in public session, ” NYSRPA President Tom King said in a press release. “Everybody knew the money was there.”

The release cites a report published on April 11 in the Adirondack Daily Enterprise:

“Assemblyman Dan Stec is warning against a provision in the state budget which would fund a state database for gun records, required by last year’s Secure Ammunition and Firearms Enforcement Act. Stec, a Republican from Queensbury, objects to a $3.2 million allocation in the budget to implement the database. That line item falls within a provision that gives state police $88.9 million for technical police service programs. The state gave $27.7 million for a SAFE Act database last year, according to news reports …”

“There is a reason the Senator quoted by the Post wants to remain anonymous,” King said. “Their statement is an easily provable falsehood. This is classic Albany politics: Tell their constituents one thing and do the exact opposite in the legislature and hope nobody notices the difference.”

More good news from Chicago. The Democratic capital of the world. ComEd customers face 38% price increases starting June 1

More good news from Chicago.  The Democratic capital of the world.  ComEd customers face 38% price increases starting June 1

By Julie Wernau Tribune staff reporter

3:21 p.m. CDT, May 7, 2014

ComEd customers will face steep price increases starting June 1.

Customers who receive energy from Commonwealth Edison will see a 38 percent increase in the price of electricity as a result of rising costs to reserve power from power plants, an indication of dynamics that are at play in the larger electricity market.

That’s because fewer cheap electricity providers promised to provide power to the electricity grid this summer, in particular, coal plants which once provided a cheap and abundant source of power. Many have closed or demanded more money to operate and 2014 is the first year consumers are expected to see a marked impact in electricity bills as a result.

“You have a decision as a coal plant owner,” Travis Miller, director of utilities research at Chicago-based Morningstar. “You put a bunch of capital into a coal plant to keep it running or you shut it down. If power plants are not properly rewarded for having enough capacity to serve those hottest days, the lights are going to go off. Power producers are not going to invest in the generation that systems needs if they’re not able to earn adequate returns.”

According to regulator Illinois Commerce Commission, the cost of electricity, coupled with reservation fees and transmission costs, will rise to 7.5 cents per kilowatt hour from 5.5 cents per kilowatt hour next month.

The average ComEd residential customer uses approximately 655 kilowatts of electricity per month, according to ComEd, which, together with delivery costs would increase bills by 21 percent from about $68 to about $83 per month.

The prices were set as a result of an auction last month held to purchase power on behalf of ComEd customers. Energy prices make up about two-thirds of the average residential electricity bill.

At the same time, ComEd is asking all electricity customers to pay more to have electricity delivered, a fee all electricity customers in ComEd’s territory pay regardless of which company supplies that electricity. That’s because ComEd owns the lines that flow electricity into homes.

If approved by the ICC, the delivery rate hike would add another $3 to the average electricity bill beginning in January 2015 on top of the $5.50 extra per month customers saw at the beginning of 2014.

The new rates also mean Chicagoans who were switched over to electricity supplier Integrys are no longer enjoying dramatically lower rates than customers who switched to ComEd. The difference between the energy costs of the two suppliers is now fractions of a penny on average.

Municipalities who helped switch their residents to new suppliers and found bargain basement deals are also unlikely to see those same deals going forward.

“The increase that was announced today is something that is going to affect everyone in ComEd no matter who you use to supply electricity and really everyone in this electricity market,” said David Kolata, executive director of consumer advocate group Citizens Utility Board, based in Chicago.

All electricity customers have a choice about who supplies electricity. The Illinois Commerce Commission hosts a web site that lists the prices being offered by dozens of electricity suppliers at Customers should check the terms and conditions in their contracts to see if switching will impose a fee.

“If you go on there right now you’ll see there are quite a few offers that are below the summer rate right now. There’s also plenty of them that are above it. It’s a mix,” said Torsten Clausen, director of the Office of Retail Market Development for ICC.

Analysts who closely follow the electricity markets have known for three years that electricity prices would spike this year.

An annual “capacity” auction decides which electricity providers will be paid for committing to run their power plants so the lights stay on.

The auction reserves power three years in advance by the agency that manages the electric grid, the PJM Interconnection.

It is held to ensure that enough electricity — plus a reserve — is generated to prevent blackouts. Each year the agency chooses the lowest-cost mix of power from electricity operations fueled by coal, nuclear, wind, solar or natural gas, among others.

Winners walk away with lucrative “capacity payments,” paid by consumers in their electricity bills, as an incentive to invest in plants and keep them running. Losers face the prospect of shutting down.

The auction for 2014-2015 reserved year, the auction procured 149,974.7 megawatts of capacity at $126 per megawatt in the area that includes Chicago — a megawatt can power 800 to 1,000 homes. That compares to the $27 per megawatt consumers have been paying this year, a 367 percent increase. In 2015-2016 prices will expected to spike again to $136 per megawatt hour before normalizing.