Motor Fuels

GAO was asked to summarize the results of studies on the cost effectiveness of using reformulated gasoline (a process in which oxygenates or ethanol is added to gasoline to enhance combustion and reduce automotive emissions); the results of studies estimating the potential for oxygenates to reduce petroleum use; and ongoing federal research into biofuels. Studies by the Environmental Protection Agency (EPA), the American Petroleum Institute, and others suggest that reformulated gasoline may be cost effective compared to some automotive emission control measures but less cost effective than others. The methodologies used and the results showing the cost effectiveness of the control measures for these studies vary significantly, making comparisons very difficult. About 305,000 barrels per day of the petroleum used to produce gasoline will be potentially displaced by oxygenates in the year 2000 and about 311,000 barrels per day in 2010 according to projections of oxygenate use. The Department of Agriculture (USDA) is focusing research primarily on reducing the cost of growing and converting agricultural feedstocks, such as corn, into ethanol. Data from USDA and the Department of Energy indicate that research has lowered the cost to produce ethanol from both cellulosic biomass and from corn. Although demand for corn for other purposes may limit cost reductions in producing ethanol from corn, the demand for ethanol made from cellulosic biomass for use as an oxygenate and as an alternative fuel could rise significantly.

GAO found that: (1) RFG is more cost-effective than some automotive emission control measures; (2) the extent and nature of air pollution in any specific area determines whether certain pollution control measures are used individually or in combination with other control measures; (3) about 305,000 barrels of petroleum per day are at risk for displacement by the year 2000; (4) this displacement amounts to nearly 3.7 percent of the estimated gasoline consumption for year 2000 and 3.6 percent for 2010; (5) the Department of Energy is focusing its efforts on reducing the cost of growing and converting biomass feedstocks into ethanol, and the Department of Agriculture is focusing on reducing the cost of growing and converting agricultural feedstock into ethanol; (6) advances in biofuels research has reduced the cost of producing ethanol from biomass crops; (7) further cost reductions in producing corn-based ethanol, and the subsequent demand for it, may be constrained by the price of corn and its many uses; and (8) the demand for ethanol will increase assuming the successful development and commercialization of biofuels technology.