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US Navy pays $26 a gallon for biofuels

The Departments of Agriculture and the Navy announced plans to buy 450,000 gallons of biofuel at a cost of about $26 per gallon, totaling $12 Million in what will be the largest federal purchase of biofuel in U.S. history.

This new purchase, at first, will cost $26 per gallon, or $1,092 per barrel. That biofuel will then be blended with an equal amount of fossil fuel, producing 900,000 gallons — and an effective price of about $15 per gallon for that 50/50 blend.

Bloomberg reports that the deal follows an August announcement by the Navy and the U.S. energy and agriculture departments to invest $510 Million to retrofit or build new biofuel processing plants.

The purchase has been authorized by an executive order by President Obama. The administration gave no indication why they’re not going through Congress.

The participating companies are Tyson Foods, Syntroleum Corp, and Solazyme. Interestingly, a member of Obama’s presidential transition team, T. J. Glauthier, is a “strategic advisor” at Solazyme, one of the companies to benefit from the half-billion-dollar government investment.

Tyson Foods is headquartered in Springdale, Arkansas, and is one of the world’s largest processors and marketers of chicken, beef and pork.

Syntroleum Corp (a publicly held US company who merged with SLH Corporation) together with Tyson, will construct the world’s first renewable synthetic fuels plant utilizing its technology and Tyson sourced agricultural feedstock.

Solazyme is headquartered in San Francisco and specializes in algae fuel.

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