By on May 5, 2011

A massive study by the Government Accountability Office into “Opportunities to Reduce Potential Duplication in Government Programs, Save Tax Dollars, and Enhance Revenue” has turned up an interesting finding. It seems that the government’s desire to buy more “alternative fuel vehicles” (AFVs) may actually increase the amount of gasoline used by government fleets. Why? Because agencies largely buy E85 ethanol-powered vehicles to fulfill their AFV requirements, and there aren’t enough E85 pumps to actually fuel the fleet, forcing agencies to obtain waivers to buy regular gasoline. Hit the jump for the report’s full findings on this, the latest unintended consequence of America’s ongoing ethanol-subsidy boondoggle.

The GAO report finds to basic contradictions in the government’s AFV-boosting fleet strategy, to wit:

  • Increase the use of alternative fuels vs. the unavailability of alternative fuels.Agencies are required to increase alternative fuel use, although most alternative fuels are not yet widely available. Thus, agencies have been purchasing primarily flex-fueled AFVs, those that can operate on E85—a blend of up to 85 percent ethanol and petroleum—or petroleum. However, since E85 was only available at 1 percent of U.S. fueling stations in 2009, agencies are requesting waivers from the requirement to use alternative fuels. According to DOE, in 2010, approximately 55 percent of flex-fueled AFVs received a waiver. Further, some fleet operators indicated they use petroleum without a waiver when alternative fuels are available because it is either more convenient, less expensive, or both.
  • Acquire AFVs vs. reduce petroleum consumption. Agencies are required to purchase AFVs, but this requirement may, in some cases, undermine the requirement to reduce petroleum consumption. Virtually every agency has succeeded in acquiring more AFVs, but there have been only modest reductions in petroleum use and modest increases in alternative fuel use, due to the lack of available alternative fuels. As previously stated, the lack of available alternative fuels results in agencies using petroleum to fuel AFVs. In areas where alternative fuels are not available, purchasing more fuel efficient non-AFVs could reduce petroleum consumption more than purchasing AFVs.

Meanwhile, until we hear of specific plans to fix these fundamental issues, expect the waste and non-fulfillment of gasoline use reduction goals to continue, as President Obama recently pledged that every new government fleet vehicle purchase would be an AFV by  2015. E85 is widely considered to be the most common type of government AFV purchase, as they are relatively cheap and more robust for certain government tasks than hybrids and plug-ins. And, as Automotive News [sub] reports, the baseline ain’t great either:

In 2009, Obama’s first year in office, the U.S. government increased gasoline use in vehicles 3 percent from the previous year even as he boosted hybrid purchases to about 10 percent of the federal fleet from 1 percent in 2008, according to data from GSA and the U.S. Energy Information Administration.

Overall government energy use fell about nine-tenths of 1 percent in 2009, the data showed. Figures for 2010 are scheduled to come out later this year.

And if the government is struggling to actually reduce its gasoline use with E85 vehicles, imagine how the rest of the US is doing. After all,

Vehicles that can run on E85 accounted for 37,590 of the 43,750 alternative-fuel fleet vehicles sold last year, according to the Energy Information Administration

Meanwhile, on the other end of the ethanol subsidy complex, the US Comptroller General used his testimony [PDF] to identify domestic ethanol subsidies as an “Opportunity to Reduce Potential Duplication in Government Programs, Save Tax Dollars, and Enhance Revenue” saying

Congress supported domestic ethanol production through a $5.4 billion tax credit program in 2010 and through a renewable fuel standard that applies to transportation fuels used in the United States. The ethanol tax credit and the renewable fuel standard can be duplicative in stimulating domestic production and use of ethanol, and can result in substantial loss of revenue to the Treasury. The ethanol tax credit was recently extended at 45 cents per gallon through December 31, 2011. The tax credit will cost $5.7 billion in forgone revenues in 2011. Because the fuel standard allows increasing annual amounts of conventional biofuels through 2015, which ensures a market for a conventional corn starch ethanol industry that is already mature, Congress may wish to consider whether revisions to the ethanol tax credit are needed, such as reducing, modifying, or phasing out the tax credit.

Instead, it seems the government is heading in the opposite direction, sinking yet more money into ethanol infrastructure. AN [sub] reports:

A U.S. Agriculture Department program that started in the last two weeks is pushing for 10,000 pumps in the next five years, he said. The U.S. has about 162,000 fueling stations, according to the association.

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22 Comments on “GAO: Government Ethanol Rules Actually Increase Gasoline Use...”


  • avatar
    Scoutdude

    Pretty misleading headline there. Just because they purchased more FFVs and fuel consumption went up does not mean it was due to the FFVs. How about the total number of miles driven, did that change year to year? Yes FFVs for the most part are the larger cars and full-size trucks, but that doesn’t mean that the agency could have or would have purchased a smaller more fuel efficient non-FFV w/o the AFV mandate.

  • avatar

    Aren’t most AFVs fuel-gulping SUVs? I thought that would be a pretty obvious reason for energy use to increase significantly.

    D

    • 0 avatar
      LectroByte

      I thought most of GM and Ford’s lineups were e85 friendly, I see a lot of flex fuel badges on the Malibus that our local government operates.

  • avatar
    PVDave

    The ethanol lobby has solid understanding of how to use regulation to their own advantage. In addition to regulations driving E-85 Fleet sales, there are also rules in the Corporate Average Fuel Economy (CAFE) policy that promote E-85 sales.

    The theory behind this credit states that because E-85 vehicle consume Ethanol, they should receive a higher gasoline fuel economy rating that reflects this theoretical reduction in gasoline consumption. Is there a real world benefit to support the theory? Based on the date in this report, reduced gasoline consumption due to E-85 vehicle sales seems unlikely. Regardless, manufacturers still get (paper) credits in their CAFE calculations, and the E-85 lobby gets E-85 compliant vehicles that can burn their fuel.

    • 0 avatar
      Lumbergh21

      Of course they have a solid understanding of how to use regulation to their own advantage. They’ve had how many years of practice at farm subsidies? Just another farm subsidy, nothing to see here, move along.

  • avatar

    Interesting article, but I’ll agree the headline was a bit misleading for me as well. I came in thinking this was about how vehicles running E85 are less fuel efficient than their petroleum cohorts.

    If I’m not mistaken, petrol runs stoich at 14.7:1, while ethanol is, what, 10.0:1? Therefore, a flex vehicle that gets 400 miles on a tank of gas might only make it half as far on the subsidized corn juice. If it takes twice as much E85 to go the same distance, I was figuring there would be some figures pointing out how that 15% gasoline content came into play.

    Still. An interesting showcase of politicians spinning bandages as cures.

    • 0 avatar
      Scoutdude

      In the real world most FFVs loose 10~15% of the MPG they get with gasoline, the worst of the worst can loose up to 25%. The trick is to run E40~E50 range where MPG is actually improved up to 15%. In the E50~E60 range good FFVs will return about the same MPG as when run on E10. Past E60 the MPG drops off dramatically. We have a 2000 Taurus FFV and I did extensive testing with it when I’ve taken it to areas where E85 is available. With not quite full 85% it lost 13% in the city and 12% on the hwy. With ~45% MPG improved ~12% on the hwy, didn’t do enough tanks of city to do a valid test there.

      The bigger boondogle related to ethanol is the RFS or renewable fuel standards that is on it’s way to replacing all automotive gas with E10 across the country. That in the real world does nothing to reduce the amount of fossil fuels as on average today’s fleet loses 10% of it’s MPG. Over the years I experience that with many of my cars. Some it doesn’t affect as much but others it can cause a loss of up to 15%. The mandate for E10 also keeps the price of E85 artificially high, the oil companies must buy it and as long as it doesn’t cost more than it costs them to produce gas they are happy.

      • 0 avatar
        rocketrodeo

        I ran a few tanks of E85 through my flex-fuel Ranger to see what my fuel-economy loss is. It’s between 15 and 20 percent, though drivability and power increase significantly. And I’ll confirm what you say about higher blends of ethanol in gasoline; my fuel economy is on par or slightly better than E10 when I’m blending to the equivalent of E40. This is proving to be a real money saver here recently.

        Oh, and when I am using E85, which I don’t unless it’s 20 percent cheaper than regular, I’m getting 115 miles per gallon of gasoline. So yes, the headline Ed used is a bit inaccurate, though probably not intentionally misleading.

      • 0 avatar
        Scoutdude

        @ rocketrodeo, Good to see you noticed the increase in power running E85. The first time the wife drove our Taurus after putting E85 in it she came home and said “what did you do to my car”. I was afraid that there was some body damage or something so I sheepeshly said nothing. She replied so you didn’t tune it up or hot rod it some way? I replied no. She then said well you must have done something because it sure has more power.

      • 0 avatar
        rocketrodeo

        Yep, big difference. Whenever I tow, I blend.

  • avatar
    bd2

    We can all thank big-agri for the boondoggle that corn-based ethanol is.

  • avatar
    Rada

    Variable compression ratio engines ftw!

  • avatar
    MikeAR

    It’s kind of funny, we’re quibbling over ethanol efficiency at various percentages while people in the rest of the world starve because corn is so expensive and in short supply. Every subsidized bushel of corn that is wasted in ethanol would be better used to feed people in the third world.

    • 0 avatar
      aristurtle

      Also, even if you like ethanol as a fuel source rather than as a beverage, corn is a hilariously inefficient way to produce it.

    • 0 avatar
      rocketrodeo

      All things being equal, perhaps so, but corn markets are a bit more complex than that. Given the amount of corn we export for animal feed, and the percentage that we use here for the same purpose, one might require a careful definition of “waste.” I’m not much of a red meat eater, myself, so I’m doing my part.

      As well as a careful definition of “food.” Yellow corn is a commodity feedstock. And corn processed as ethanol retains much of its nutrient value after processing, as distiller’s grain. White corn is human food, and gets a $.30-.70 per-bushel premium. Perhaps it would be illuminating to ask farmers why they prefer growing lower-priced commodities.

    • 0 avatar
      Rada

      Only animal feed corn variety is used for ethanol production, and after the ethanol is produced, what remains still goes to animal feed, retaining the most valuable nutrients. I think it’s been shown in many studies that ethanol fuel does not alter food prices in any measurable way.

      • 0 avatar
        Lumbergh21

        Well, other than the land that would have been used for growing food stuffs now grows corn for ethanol production. It has to grow somewhere.

      • 0 avatar
        Scoutdude

        @ lumbergh21 you mean other than the land the gov’t would have paid farmers not to grow anything on? Since ethanol became big business there has much less of the gov’t paying farmers not to plant crops. Plus it increased the supply of feed for livestock.

  • avatar
    Steven02

    I think the title is misleading as well. The 3% increase in gasoline usage could be that there was more driving on, not necessarily that the AFV rules caused the increase in gasoline usage. If I drive a truck a little and sell it. Then drive a Prius a lot, I could see gasoline usage go up. Without seeing the actual numbers of driving, how can you say the rules caused this problem?

    Also, since 10% of the purchases were hybrids recently, you would have thought that would have helped the numbers. Why not say that the increase of hybrids drove up gasoline usage as well?

  • avatar
    Andy D

    Meh, gas an’ alcohol dont mix , ask any MADD-ite. Cows should be grass fed not force fed corn too. The chemicals used in corn production are killing the Mississippi River watershed and the Gulf of Mexico with the runoff. The soil dries up and blows away as well. I’m just mad that all the corn I plant ends up as raccoon food.

  • avatar
    Ubermensch

    I would recommend everyone watch the documentary King of Corn. It details the corn industry and how it works on many levels. Feeding corn to cows is about the worst waste of food imaginable, and it makes the cows extremely sick. For those claiming that E85 has eliminated federal subsidies need to check some facts. It is all but impossible to grown corn in the US and make a profit without the subsidies. The push for higher and higher yields has driven down the price on corn so much that you cannot make a profit without government subsidies, of which big agri is the biggest benifactor. Once again, socialism for the rich, free-market for everyone else.

    • 0 avatar
      Scoutdude

      I never said it eliminated all federal subsidies just many of those related to paying farmers not to farm. You need to check some facts as the price of corn has gone up not down, though foreign demand is a larger factor behind that.


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