UPDATE 1-Oil rises from 1-week low, U.S. inventory data in focus
* Oil rebounds after dropping to 1-week low on dollar strength
* Oklahoma senator secured millions for biofuels 2002-2005
* Inhofe opposed Navy's "Green Fleet" project this year
* "Green Fleet" supplier benefited from Inhofe's earmarks
By Marcus Stern
WASHINGTON, Aug 6 A vociferous Republican critic of the U.S. military's spending on expensive biofuels was himself instrumental in securing federal funds to develop such fuels.
Senator Jim Inhofe, at the center of a Washington dispute over the issue, pushed a provision in May barring the Pentagon from buying alternative fuels if they cost more per gallon than petroleum-based fuels. He has called the Obama administration policy "completely skewed."
But between 2002 and 2005 Inhofe helped secure $10 million in military funds to test such expensive fuels. More than half of those earmarked funds, $5.95 million, went to a company in his home state of Oklahoma.
His efforts benefited Tulsa-based Syntroleum, which has used federal funds to test and develop renewable fuels. A 2006 Air Force contract Syntroleum received because of an Inhofe earmark -- as funds directed by Congress to specific projects are called -- involved a payment of $2.3 million for 104,000 gallons of fuel. That equals about $22 a gallon.
Inhofe has been a sharp critic of the Navy "Green Fleet" demonstration project that was part of an Obama administration effort to increase the Pentagon's use of alternative fuels. He voiced outrage at the $26-a-gallon price tag for the Navy project.
But in criticizing the "Green Fleet" project, Inhofe, it turns out, was opposing a program that benefited the very same Oklahoma renewable fuels company to which he had steered millions in funding. A Syntroleum joint venture was the fuel supplier to "Green Fleet."
Proponents of military purchases of alternative fuels charge him with inconsistency.
"It is completely contradictory and confusing that today Senator Inhofe doesn't believe that petroleum substitutes help America's security when he completely believed that a decade ago," said Ben Lowe, a spokesman for Operation Free, which supports military biofuels use.
Inhofe says he supports alternative fuel development but views the "Green Fleet" demonstration last month as President Obama pushing his "liberal green agenda."
OKLAHOMA FUELS COMPANY GOT CONTRACTS
Inhofe's biofuels earmarks in defense-spending bills came in 2002, 2004 and 2005. Those earmarks were converted into Pentagon contracts worth $5.95 million for Syntroleum.
"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 after Congress approved a $3.5 million Inhofe earmark in 2002.
That congressional earmark led to a $2.5 million contract for Syntroleum to explore the feasibility of deploying small refineries at forward operating bases. The idea was to reduce the need to deliver fuel in places like Afghanistan using dangerous overland conveys, which are frequent targets of enemy ambushes. The $2.5 million contract included delivery of 18 drums of fuel.
Inhofe said his support of the Syntroleum projects was different from the $12 million the Obama administration spent on fuel for the "Green Fleet" demonstration. The earlier funds came from the research and development account while the recent money came from the Navy's operations and maintenance account, he said.
"To be clear," Inhofe wrote in a letter dated Aug. 2 to Navy Secretary Ray Mabus, "I fully support the development and use of all sources of alternative fuels." But, he added, "At the same time, I believe these pursuits within the military must be sensible and affordable solutions. Using scarce Operations and Maintenance (O&M) funds impacts readiness and jeopardizes the lives of our service men and women."
The "Green Fleet" demonstration was part of the U.S. Pacific Fleet's biennial Rim of the Pacific exercise off Hawaii.
Inhofe has been a leading congressional critic of the theory of climate change, calling it a hoax. Since 1989, he has received $1.4 million in campaign contributions from the oil and gas industry, more than any other sector. His top corporate contributor has been petrochemical giant Koch Industries at $90,000. Koch Industries has given the Fund for a Conservative Future, a political group affiliated with Inhofe, $51,000 since 2000, according to data compiled by OpenSecrets.org.
Inhofe is unapologetic about his alternative fuels earmarks. Most members of Congress have come to see earmarks as a lightning rod for criticism, a source of pork-barrel spending and some even as an invitation to corruption due to scandals in recent years involving alleged ties between earmarks and campaign contributions, which is reflected in a current self-imposed moratorium on them.
INHOFE SUPPORTS EARMARKS
In response to questions from Reuters last week about Inhofe's earmarking of alternative fuels, his spokesman, Jared Young, explained the senator does not share other Republican senators' opposition to earmarks.
He referred Reuters to a 2010 article Inhofe wrote for the conservative magazine National Review, in which he defended earmarks, writing, "Getting rid of earmarks does not save taxpayers any money, reduces transparency, and gives more power to the Obama administration."
Despite Inhofe's support for earmarking, the conservative National Taxpayers Union gave him its 2011 Taxpayers' Friend Award and an "A rating" for "his fiscally responsible voting record."
Syntroleum Senior Vice President Ronald Stinebaugh, speaking for the company, declined to comment.
Syntroleum began working on alternative fuels in 1984 and today is positioning itself as a leader in the market. Along the way it relied on some of Washington's top lobbying firms, including Patton Boggs.
But its go-to lobbyist has been former Representative J.C. Watts, who has earned $1.5 million in fees from the company, lobbying records show. The Oklahoma Republican was the fourth-ranking Republican in the House before he retired in 2003.
In addition to its defense contracts flowing rom earmarks sought by Inhofe and former Senator Don Nickles, Syntroleum has received Energy Department grants worth millions of dollars.
But finding revenues other than government earmarks or grants has been a challenge for Syntroleum. Last year, the company had a total of $4.2 million in revenues against $4.8 million in expenses. It is unclear how much came from sources other than the government. The company has 21 full-time employees, according to its most recent annual report.
Syntroleum is involved in a joint venture with Arkansas-based Tyson Foods to produce diesel fuel from animal fats and vegetable oil. The venture, based in Louisiana and named Dynamic Fuels, was awarded the $12 million contract to provide the alternative fuels for the Navy's recent "Green Fleet" demonstration. That purchase triggered Inhofe's ire.
Lowe, of Operation Free, chided Inhofe for criticizing the "Green Fleet" project.
"It's Senator Inhofe's job to worry about national security and the benefit of the people of Oklahoma," he said. "That's why people elect him and why it's especially strange to see him opposing what the military said is going to be good for national security and a program that directly benefits Oklahoma."
* Oil rebounds after dropping to 1-week low on dollar strength
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