Summary

A request was made that GAO review selected aspects associated with developing ethyl alcohol (ethanol) as a national fuel source, and evaluate the efforts undertaken in this area by the Department of Energy and other Federal agencies.

The GAO review of ethanol's potential for widespread use as a motor vehicle fuel showed that ethanol cannot meet all of the Nation's motor vehicle fuel needs. Limited raw materials such as grains, sugar crops, and agricultural processing wastes preclude the production of sufficient ethanol to totally replace the 110 billion gallons of gasoline used annually. However, it appears entirely feasible that the Nation's vehicle fleet could be operating on a blend of 10 percent ethanol, 90 percent unleaded gasoline (gasohol) by the year 2000. Further, the review showed that the impact on the fuel consumer, as represented by the price of the service station pump, could be slight. Although the plant price of ethanol is currently as high as $1.80 a gallon, there are indications that a considerable amount of profit-taking is occurring at these prices due to an excess of demand over supply. As new, more efficient distilleries are put into use and if sufficient quantities of relatively inexpensive feedstocks such as corn, milo, and possibly cellulose are available, the price of ethanol could decline to the point where its use in a 10-percent blend will have a negligible economic impact on the fuel consumer. Moreover, a national gasohol program could cut U.S. oil imports by 260 million barrels a year at a savings of over $8 billion, based on current prices of imported oil. Thus, ethanol represents an important partial solution in the Nation's overall strategy for solving its liquid fuel supply problems.