Auto fleet law not likely to spike propane prices

The U.S General Accounting Office predicts U.S. propane prices will increase less than 0.5¢/gal in the next 2 years despite a federal law encouraging government and business vehicles to use alternate fuels. The 1992 Energy Policy Act requires all fleet operators to shift to alternate-fueled vehicles in order to reduce U.S. oil imports. The goal is to replace 30% of the fleets' use of conventional fuels by 2010.

Oct. 5, 1998

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The 1992 Energy Policy Act requires all fleet operators to shift to alternate-fueled vehicles in order to reduce U.S. oil imports. The goal is to replace 30% of the fleets' use of conventional fuels by 2010.

But GAO, a congressional watchdog agency, said the price effects would be negligible, because government agencies will not meet the interim goal of converting 10% of their fleets to alternate fuels by 2000.

It said agencies would be fortunate to reach 1%.

The petrochemical industry uses most of the propane produced in the U.S. Residential heating is the next largest market.

GAO said that industrial and residential consumers would see propane prices increase about 0.1¢/gal in 2000, while transportation users see an increase of 0.43¢/gal.

It said, "We project that, in 2010, price increases due to the act will be, on average, 1.5¢/gal for the residential sector, 1.7¢/gal for the industrial sector, and 2.33¢/gal for the transportation sector."

Sens. Tom Daschle (D-S.D.) and Dale Bumpers (D-Ark.) requested the GAO study over concerns that the government program could cause propane prices to soar.