Solazyme Inc (SZYM), SolarCity Corp (SCTY): Weapons Might Not Be Our Ultimate Military Advantage

Achieving lift-off with biofuels
In fiscal year 2011, the United States Air Force spent $8.3 billion on jet fuel. This is far and away the largest energy cost for the Air Force today, representing 85.5% of the entire energy budget. Again, not only is this a cost problem, but a large amount of U.S. oil is still sourced from outside the United States. To help alleviate this issue, the Air Force is hoping that biofuels can provide a possible solution. One distinct advantage that using biofuels has is that they could be produced on-site, which could potentially cut costs as well as enhance supply-chain security.

So far, the military is getting a bit of flak for these projects. In its most recent dealing with Solazyme Inc (NASDAQ:SZYM), which is looking to create an algal-based jet fuel, the price tag came out to about $26 a gallon. I agree that buying fuel at those types of costs is completely unsustainable, considering current jet fuel prices are around $3 a gallon. At the same time, this was a test batch of fuel produced in a small lab to see if it could be used in jet engines. As technology and manufacturing processes improve, these prices will come down and could potentially fall within a competitive pricing range of petroleum-based jet fuels while also providing a domestic, secure source that isn’t exposed to the global fuel market.

What a Fool believes
The incorporation of alternative energy solutions is not only a way that our military can save money, but it also provides a level of security that can’t be guaranteed with the use of traditional oil. Not all of the technology has been completely proven, and it may take a couple of years before the new alternatives sit at the price levels of fossil-fuel options, but backing from the military will certainly help it get there.

The article Weapons Might Not Be Our Ultimate Military Advantage originally appeared on Fool.com and is written by Tyler Crowe.

Fool contributor Tyler Crowe owns shares of SolarCity. You can follow him at Fool.com under the handle TMFDirtyBird, on Google +, or on Twitter, @TylerCroweFool.The Motley Fool owns shares of Solazyme.

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