Energy Policy Act of 1992

Congress passed the Energy Policy Act in 1992 to encourage the use of alternative fuels, such as ethanol, propane, and electricity, in cars and light trucks. GAO found that since 1992, some, albeit limited, progress has been made in acquiring alternative fuel vehicles and reducing the consumption of petroleum fuels in transportation. However, the act's goal of replacing at least 10 percent of petroleum fuels with alternative fuels in 2000 and 30 percent in 2010 will not be achieved under current economic conditions. The act's goals for fuel replacement are not being met principally because alternative fuel vehicles have significant economic disadvantages compared to conventional gasoline vehicles. Fundamental economic impediments--from the relatively low price of gasoline to the lack of refueling stations for alternative fuels to the higher cost to buy these vehicles--explain why both mandated fleets and the general public are not inclined to acquire alternative fuel vehicles and use alternative fuels. Any effort to significantly expand the use of alternative fuel vehicles will need to address their current cost disadvantages relative to vehicles that use gasoline.

GAO noted that: (1) since the passage of the Energy Policy Act of 1992, some progress has been made in acquiring alternative fuel vehicles and reducing the consumption of petroleum fuels in transportation; (2) the Department of Energy (DOE) estimates about 1 million alternative fuel vehicles were on the road in 1999; (3) it also estimates that, in 1998, alternative fuels used in alternative fuel vehicles replaced about 334 million gallons of gasoline; (4) about 3.9 billion gallons of alternative fuels were blended with gasoline and used in conventional vehicles in 1998; (5) in total, about 4.23 billion gallons of gasoline were replaced by alternative fuels or approximately 3.6 percent of all highway gasoline use--considerably less than the act's goal of 10 percent in 2000; (6) in a 1999 draft report required by the act for Congress, DOE concluded that the act's goals for replacing petroleum fuels with alternative fuels would not be achieved under current conditions; (7) the goals for fuel replacement are not being met principally because alternative fuel vehicles have significant economic disadvantages compared to conventional gasoline vehicles; (8) fundamental economic impediments--such as the relatively low price of gasoline, the lack of refueling stations for alternative fuels, and the additional cost to purchase these vehicles--explain much of why both mandated fleets and the general public are disinclined to acquire alternative fuel vehicles and use alternative fuels; (9) in addition, aspects of the act's approach do not directly address its goal to replace petroleum fuels; (10) the act also limits its focus to light-duty vehicles and does not include other ways to reduce petroleum consumption; (11) according to a DOE analysis, even if crude oil prices doubled from current levels of about $20 per barrel, alternative fuels' share of the market would not increase; (12) some modest increases in the use of alternative fuels or reductions in the use of gasoline could occur if limitations in the act's approach were addressed; (13) the focus of the act's mandates could shift from acquiring alternative fuel vehicles to using alternative fuels; (14) the act's scope could broaden from exclusively promoting alternative fuels to include other ways to reduce the use of petroleum fuels; and (15) the act could also target its promotion of alternative fuels to specific areas where a particular fuel might be plentiful or applications in which the fuels will make better economic sense.