Sharply increased production of gasohol from corn and other agricultural crops could "drive up the price of farm commodities and ultimately the price of food," according to a congressional study.
However, if non-food raw materials are used, the Office of Technology Assessment study finds that gasohol can reduce oil imports and save energy.
Further, the OTA says that gasohol produced from coal -- instead of grain or crop residues -- is nearly competitive economically with gasoline refined from $20-a-barrel oil.
Currently the nation produces 150 million to 200 million gallons of gasohol, compared with about 110 billion gallons of gasoline consumed by motorists annually.
The OTA found that the nation could produce 1 billion to 2 billion gallons of gasohol without having a significant impact on food prices.
While the congressional study made no specific recommendations, its findings could have an impact on legislation pressed by farm state legislators including Rep. Berkley Bedell (D-Iowa), Sen. Frank Church (D-Idaho), and Sen. Herman E. Talmadge (D-Ga.) to benefit their farming constituents.
Gasohol, a fuel mixture of 10 percent alcohol and 90 percent gasoline, is being sold in more than 550 service stations, most of them in the nation's farm belt.
The alcohol used in gasohol is ethanol, the product of distilling grain, crop residues, and other materials.
Gasohol also can be made from methanol, or wood alcohol, although to be efficient, the mixture has to be lowered to one part methanol to 19 parts gasoline.
The OTA's 71-page report rebutts arguments offered by some of the major oil companies until quite recently that making gasohol on a large scale uses more energy than it produces.While economics vary from distillery to distillery, the congressional study found that by using coal or solar power to produce alcohol, the nation can save one gallon of gasoline and the equivalent in natural gas for every gallon of ethanol used by motorists.
The OTA concluded that current federal subsidies are adequate to allow gasohol to compete with gasoline at today's prices. Because of a two-year-old tax law, ethanol in gasohol now receives a $16.80 a barrel subsidy. And under Energy Department regulations soon to go into effect, gasohol will also share in the government's subsidy program.
On still another often argued gasohol issue, the OTA found that mileage from gasohol averages either the same of up to 4 percent less than gasoline. At the same time, however, the study said alcohol additives raise the octane in lower grade gasoline mixes.