In response to a congressional request, the General Accounting Office (GAO) examined the ethanol industry's capability to expand its production capacity, the effects that expanded ethanol production could have on the agricultural sector and consumer food prices, and how the increased production could affect certain aspects of the federal budget. The results of GAO's study, in brief, are as follows: The ethanol industry is capable of doubling or tripling domestic ethanol production to 2.2 or 3.3 billion gallons per year during the next 8 years, and American farmers could supply the corn needed. Industry officials caution, however, that continued government incentives and/or a legislative requirement for the use of alternative fuels, such as ethanol, would be needed to maintain such growth. GAO's modeling showed that the expanded use of ethanol fuels would have mixed effects on various sectors of American agriculture. Overall, net farm cash income would increase, and there would be a slight increase in consumers' food prices. GAO's modeling also showed that expanded ethanol production would decrease federal farm program outlays. At the same time, the increased use of ethanol fuels would reduce federal motor fuel tax revenues because of ethanol's partial tax exemption. This study, because of its limited nature, did not explore all the federal budget or consumer impacts that might result from expanded production, such as the income taxes paid by farmers, ethanol producers, and fuel distributors.

  • Record URL:
  • Supplemental Notes:
    • Report to the Chairman, Subcommittee on Energy and Power, Committee on Energy and Commerce, House of Representatives.
  • Corporate Authors:

    U.S. General Accounting Office

    441 G Street, NW
    Washington, DC  United States  20548
  • Publication Date: 1990-7

Media Info

  • Features: Appendices; Tables;
  • Pagination: 42 p.

Subject/Index Terms

Filing Info

  • Accession Number: 00497342
  • Record Type: Publication
  • Report/Paper Numbers: GAO/RCED-90-156
  • Files: TRIS
  • Created Date: Sep 30 1990 12:00AM