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Dropping Biofuel Prices

The U.S Navy’s recent trials of advanced biofuels during the RIMPAC exercises were attacked by critics for, among other things, the price the Navy was paying for the fuels used in a range of ships and aircraft.

Today at Wired’s Danger Room Deputy Assistant Secretary of the Navy for Energy Tom Hicks responds to those critics with one fact they don’t seem to account for: The price of advanced biofuels is certain to go down.

“We just don’t live in a world where oil prices never go up, technology doesn’t advance, and economies of scale don’t bring down cost; in fact, history tells us that the exact opposite is true. Today, the price of petroleum has more than doubled and the annual volatility is more than 30 percent. It is impossible to accurately predict where prices will be eight years from now, but with ever-increasing global demand and continued political unrest in oil-producing countries, nearly all experts agree that oil prices will increase, and we have seen the price of biofuel drop.”

As commercial quantities of advanced biofuels are produced those prices will drop even more, opening the door to competition with fossil fuels.

There should be no fear that the military will be over-spending on biofuels. Hicks affirms that when the Navy begins using biofuels on a large scale, beyond today’s test batches most critics are attacking, that they will indeed be purchased at competitive prices.

Hicks’ article is also worth reading for his breakdown of some of the resistance in Congress around advancing a domestic biofuels industry.

Read the entire response here.

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