HIGH PRICES REIN GOVERNMENT USE OF GASOHOL

The Changing Outlook For Prices in 2010 (12714 bytes) The General Accounting Office says high prices are a major reason the U.S. government is not using more gasohol. Congress put a provision in a 1991 Defense Department bill requiring federal agencies to buy gasohol (gasoline containing 10% ethanol) when it is available at a price equal to or lower than gasoline. The author of that provision, Sen. Byron Dorgon (D-N.D.), complained that gasohol use has increased only slightly since then. He

Feb. 6, 1995

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The Changing Outlook For Prices in 2010 (12714 bytes)

The General Accounting Office says high prices are a major reason the U.S. government is not using more gasohol.

Congress put a provision in a 1991 Defense Department bill requiring federal agencies to buy gasohol (gasoline containing 10% ethanol) when it is available at a price equal to or lower than gasoline.

The author of that provision, Sen. Byron Dorgon (D-N.D.), complained that gasohol use has increased only slightly since then. He asked GAO to find out why.

WHAT GAO FOUND

GAO found that the price of gasohol is often not competitive with the price of gasoline.

What's more, gasohol sometimes is not available because of the small number of ethanol and gasohol suppliers in certain regions.

"In addition," GAO said, "environmental regulations that require the use of clean burning fuels to reduce emissions may restrict the use of gasohol in some locations or affect its supply and price in others."

GAO also said the amount of gasohol used by the U.S. government is unknown because agencies do not maintain data on individual drivers' purchasers, which account for about 54% of all government motor fuel use.

The remaining motor fuels are purchased in bulk, and the percentage constituted by gasohol has not increased significantly since 1991.

In bulk purchases, GAO said, the federal government has only slightly increased gasohol use. If federal agencies bought gasohol at the same rate as the general public, 7.1% of gasoline consumption, they potentially would use 19.1 million gal/year.

The report said even after receiving a 5.4/gal exemption from the 14.1/gal federal excise tax on gasoline, the average cost of a gallon of gasohol would be 0.40 more than a gallon of gasoline.

ENVIRONMENTAL INFLUENCE

GAO said the Environmental Protection Agency's proposal to require a minimum level of renewable oxygenates in reformulated gasoline, which has been blocked in federal court, could make ethanol less available and add more pressure to gasohol's future supply and price.

GAO observed that California bans the use of gasohol during the oxygenated fuel season because its high oxygen content may lead to greater nitrous oxide emissions.

California limits the oxygen content of fuel at 2.2% to reduce nitrous oxide emissions. Gasohol has a content of 3.5%.

By March 1996, California will prohibit the use of gasohol.