Recent GAO reports

From the Government Accountability Office (GAO):

HIGHWAY PUBLIC-PRIVATE PARTNERSHIPS: More Rigorous Up-front Analysis Could Better Secure Potential Benefits and Protect the Public Interest, GAO-08-44 (pdf, 96pp/1.24 MB), Feb. 8, 2008

Highway public-private partnerships show promise as a viable alternative, where appropriate, to help meet growing and costly transportation demands. The public sector can acquire new infrastructure or extract value from existing infrastructure while potentially sharing with the private sector the risks associated with designing, constructing, operating, and maintaining public infrastructure. However, highway public-private partnerships are not a panacea for meeting all transportation system demands, nor are they without potentially substantial costs and risks to the public--both financial and nonfinancial--and trade-offs must be made.....There is no "free" money in highway public-private partnerships.

HEAD START: A More Comprehensive Risk Management Strategy and Data Improvements Could Further Strengthen Program Oversight, GAO-08-221 (pdf, 41pp/632kB), Feb. 12, 2008

This report focuses on the Dept. of Health and Human Services (HHS) Administration for Children and Families' (ACF) oversight of the Head Start program in which 1,600 local organizations receive $7 billion in grants from ACF. GAO recommends that ACF establish better criteria to spot underperforming grantees, to improve the reliability of its data, and to reduce improper payments.


HEALTH INFORMATION TECHNOLOGY: HHS Is Pursuing Efforts to Advance Nationwide Implementation, but Has Not Yet Completed a National Strategy, GAO-08-499T (pdf, 17pp/228kB), Feb. 14, 2008

In 2004 Pres. Bush established the Office of the National Coordinator for Health Information Technology (ONC) with HHS. The key areas of national health IT activities are electronic health records, standardization, networking and information exchange, and health information privacy and security.


STRATEGIC PETROLEUM RESERVE: Options to Improve the Cost-Effectiveness of Filling the Reserve, GAO-08-521T (pdf, 15pp/216kB), Feb. 26, 2008

The Strategic Petroleum Reserve (SPR) was established in 1975. The SPR currently has almost 700 million barrels of crude oil, about 56 days of oil imports, in Texas and Louisiana. The Energy Policy Act of 2005, P.L. 109-58 (pdf, 551pp.), authorized the Department of Energy (DOE) to increase the SPR to 1 billion barrels by 2018. GAO recommends that DOE consider flexible, cost-effective ways when making fill decisions.

Gas prices braking drivers

Citing a 100% increase in U.S. gasoline prices (to $3 per gallon) since 2003, the Congressional Budget Office (CBO) has published a study on gas price effects on driving and car sales. CBO analyzed data from California highways and sales of new and used vehicles from 2003 to 2006.

Among the findings:

• Freeway motorists are making fewer trips and driving more slowly
• Market share of light trucks (including SUVs and minivans) began to decline in 2004
• Used vehicle prices have shifted, with prices declining for larger models and rising for fuel-efficient cars

CBO notes two policy tools that encourage the use of more-fuel-efficient vehicles: the federal corporate average fuel economy (CAFE) standards and federal and state gasoline taxes.

Higher prices for gasoline affect both types of policies. By increasing the market demand for fuel-efficient vehicles, higher gasoline prices reduce the economic costs--to manufacturers and to consumers--of achieving stricter CAFE standards. Also, with higher gasoline prices, the average gasoline tax--or any given increase in that tax--is now a smaller share of the price of gasoline than it was in the past.

Effects of Gasoline Prices on Driving Behavior and Vehicle Markets (pdf, 58pp/828kb), January 2008

Smart grid - the bigger picture

A recent post covered a report from the Congressional Research Service (CRS) on Smart Grid, part of the Energy Independence and Security Act of 2007, H.R. 6 that became P.L. 110-140 (still unavailable online). CRS subsequently issued a report on the entire act, providing a summary of its major provisions.

The report cites the law's key provisions as:

• Corporate Average Fuel Economy (CAFE). Sets a target of 35 miles per gallon for the combined fleet of cars and light trucks by model year 2020.


• Renewable Fuels Standard (RFS). Sets a modified standard that starts at 9.0 billion gallons in 2008 and rises to 36 billion gallons by 2022.


• Energy Efficiency Equipment Standards. Includes a variety of new standards for lighting and for residential and commercial appliances, including residential refrigerators, freezers, refrigerator-freezers, metal halide lamps, and commercial walk-in coolers and freezers.

CRS summarizes each of the 16 titles in the new law.

Energy Independence and Security Act of 2007: A Summary of Major Provisions, CRS Report RL34294 (pdf, 27pp/152kB, from Open CRS), Dec. 21, 2007

Smart grid

On Dec. 19, President Bush signed into law the Energy Independence and Security Act of 2007, H.R.6, which became P.L. 110-140 (not currently available online). According to a NY Times article, it is "Legislation that will slowly but fundamentally change the cars Americans drive, the fuel they burn, the way they light their homes and the price they pay for food...."

On Dec. 20, the Congressional Research Service (CRS) issued a report on Smart Grid, provided for in Title XIII of the act.

The term Smart Grid refers to a distribution system that allows for flow of information from a customer's meter in two directions: both inside the house to thermostats and appliances and other devices, and back to the utility....The goal is to use advanced, information-based technologies to increase power grid efficiency, reliability, and flexibility, and reduce the rate at which additional electric utility infrastructure needs to be built.

Section 1307 therein provides for state consideration of Smart Grid. As summarized by CRS:

The Public Utility Regulatory Policies Act of 1978 (16 U.S.C. 2621 (d)) is amended to require each state to consider requiring electric utilities demonstrate that prior to investing in non-advanced grid technologies, Smart Grid technology is determined not to be appropriate. States must also consider regulatory standards that allow utilities to recover Smart Grid investments through rates.

Smart Grid Provisions in H.R. 6, 110th Congress, CRS Report RL34288 (pdf, 11pp/248kB, from Open CRS), December 20, 2007

Video of Speaker Nancy Pelosi speaking in favor of the bill, Dec. 6, 2007 (10:03), from YouTube:

Cutting emissions, cutting costs

A New York Times (NYT) article highlights a recently published report by McKinsey & Company which says the United States could cut greenhouse gas emissions by 28% "at fairly modest cost and with only small technology innovations." NYT reports the study finds reductions implementations "would more than pay for themselves in lower energy bills for industries and individual consumers."

There are a significant number of options where the long-term savings in terms of lower operating costs and/or lower energy usage levels outweigh the initial costs of adoptions. In simple terms, the savings outweigh the costs and significant GHG abatement can be achieved.

The study was sponsored by DTE Energy (the parent company of Detroit Edison), Environmental Defense, Honeywell, National Grid, the Natural Resources Defense Council, Pacific Gas & Electric and Shell.

Achieving these reductions at the lowest cost to the economy, however, will require strong, coordinated, economy-wide action that begins in the near future.

Reducing U.S. Greenhouse Gas Emissions: How Much at What Cost?
(November 29, 2007, pdf, 107pp/4.11MB)

executive summary (pdf, 10pp/460KB)

Ethanol - 100 billion gallons by 2025?

Growing oil consumption in the U.S. and environmental consequences from fossil fuel emissions have compelled a search for alternatives to gasoline, and ethanol is "one that can make a very large difference in a relatively short time," according to a report from the Aspen Institute.

At the end of March 2006, the Institute convened a group of 34 participants from government, farm, environmental, energy, security, and academic sectors for a policy dialogue on ethanol. The group came up with "a very ambitious goal" for the U.S. to produce annually, by 2025, 100 billion gallons of ethanol, which is half the current U.S. gasoline consumption. Ethanol from corn starch, now the primary source, could produce 15-20% of the 100 billion gallons, and the remainder would have to come from cellulose. Cellulosic ethanol requires increased crop yields and the development of biorefineries but provides higher energy returns than corn ethanol. Five of the six appendices in the report discuss cellulosic ethanol.

To realize ethanol's potential, the Aspen group advocates a multi-pronged approach of increasing feedstock production, conversion of biomass to ethanol, and the availability of flexible-fuel vehicles (FFVs) and E85 (pdf) pumps, and improving the fuel economy of vehicles.

The mission of the Aspen Institute, headquartered in Washington, DC,

is to foster enlightened leadership and open-minded dialogue. Through seminars, policy programs, conferences and leadership development initiatives, the Institute and its international partners seek to promote nonpartisan inquiry and an appreciation for timeless values.

A High Growth Strategy for Ethanol (pdf, 1.6MB, 85p.)

Related FR post: Ethanol - background and policy issues

Higher energy prices - overall effects not bad

Contrary to general expectations, the large and persistent rise in energy prices that has occurred over the past two and a half years has not caused substantial problems for the overall U.S. economy.

So begins a recent paper from the Congressional Budget Office (CBO) analyzing the short-term macroeconomic effects of rising energy prices. The paper draws comparisons to the more negative fallout of the energy crisis that occurred in the 1970s. The current effects on gross domestic product (GDP), employment and inflation have been "moderate." Why? In brief: strong consumer spending, business investment and exports; better management of monetary policy; and the economy's increased flexibility and stability. Factors that have contributed to the economy's flexibility include deregulation, advances in informtion technology, and innovations in financial markets and institutions.

Deregulation and the newer information technolgies have joined, in the United States and elsewhere, to advance flexibility in the financial sector. Financial stability may turn out to have been the most important contributor to the evident significant gains in economic stability over the past two decades. --Alan Greenspan, Sept 27, 2005.

The Economic Effects of Recent Increases in Energy Prices (pdf, 448 KB, 26p.), July 2006

Developing geothermal energy

The Government Accountability Office (GAO) today released testimony presented in the Senate on the future of geothermal energy in the U.S. The testimony was based on a GAO report issued in May.

The testimony notes, "In the United States, geothermal resources are concentrated in Alaska, Hawaii, and the western half of the country, primarily on public lands managed by the Bureau of Land Management (BLM)." Also,

Geothermal resources currently account for about 0.3 percent of the annual electricity produced in the United States, or 2,534 megawatts--enough electricity to supply 2.5 million homes. Even though the percentage of electricity generated from geothermal resources is small nationwide, it is locally important. For example, geothermal resources provide about 25 percent of Hawaii's electricity, 5 percent of California's electricity, and 9 percent of northern Nevada's electricity.

Not only do geothermal resources currently play only a small energy role, developing these resources involves "significant financial, technical, and logistical challenges." The Energy Policy Act of 2005, P.L. 109-58 (pdf), attempted to address some of these issues with provisions for tax credits, clean renewable energy bonds, transmission facilities, and incentive-based rates for electricity in interstate commerce. Because several of the Act's major provisions require implementation by agencies in the Dept. of the Interior (DOI), the testimony concludes that the future of the nation's geothermal energy depends on these agencies' actions.

RENEWABLE ENERGY: Increased Geothermal Development Will Depend on Overcoming Many Challenges, GAO-06-930T, July 11, 2006
     Full testimony (pdf, 276KB, 19p.)
     Highlights (pdf, 136KB, 1p.)
     Abstract (html)

RENEWABLE ENERGY: Increased Geothermal Development Will Depend on Overcoming Many Challenges, GAO-06-629, May 24, 2006
     Full report (pdf, 1.7MB, 53p.)
     Highlights (pdf, 600KB, 1p.)
     Abstract (html)

States boost renewable energy

In a press release yesterday, the Pew Center on Global Climate Change announced their publication of Race to the Top: The Expanding Role of State Renewable Energy Policy (pdf, 756 KB, 48p.) by Barry Rabe of the University of Michigan:

States are using increasingly aggressive and ambitious Renewable Portfolio Standards (RPS) in order to spur economic development and create a reliable and diversified supply of electricity, as well as to reduce greenhouse gas emissions and conventional pollutants. As of mid 2006, 22 states and the District of Columbia have implemented an RPS; well over half of the American public now lives in a state in which an RPS is in operation.

The report presents case studies of five states: Texas, Pennsylvania, Colorado, Massachusetts, and Nevada. The author found "an unusually high degree of bipartisan support and rapid expansion of RPSs at the state level. Economic development and job creation also emerge as drivers in virtually every state."

See also:

Greenhouse & Statehouse: The Evolving State Government Role in Climate Change by Barry Rabe, (pdf, 288KB, 53p., from the Pew Center on Global Climate Change), November 2002

The Impact of State Clean Energy Fund Support for Utility-Scale Renewable Energy Projects by the Lawrence Berkeley National Laboratory and the Clean Energy States Alliance (CESA), (pdf, 360KB, 9p., from the Berkeley Lab), May 2006

The National Conference of State Legislatures (NCSL) web page on Renewable Energy

Ethanol - background and policy issues

The Congressional Research Service (CRS) released a report on ethanol last week (Mar. 3). The study focuses on ethanol made from corn, since that is the primary source in the U.S.; in other countries it is cane sugar.

According to the study, finding alternatives to petroleum is a constant in U.S. energy policy, and ethanol plays a key role. While ethanol's primary use currently is as a gasoline additive, "it has the potential to significantly displace petroleum demand." CRS traces the initial spur for ethanol production to the mid-70s, as a response to the oil embargoes of 1973 and 1979. Thereafter, the ethanol industry got a boost when the Clean Air Act Amendments of 1990 (S.1630 which became PL 101-549) created the reformulated gasoline (RFG) program. As the report explains, RFG requires oxygenates in gasoline to reduce carbon monoxide and other emissions, and ethanol is one of the two most commonly used oxygenates. The study also discusses the most recent legislation, the Energy Policy Act of 2005 (PL 109-58, pdf, 3MB, 551p., from GPO). The Act established renewable fuel standards (RFS), mandating ethanol and other renewable fuels in gasoline.

The study asserts that the ethanol market relies heavily on federal incentives such as tax credits, import tariffs, and mandates for its use, which to ethanol opponents "amount to corporate welfare for corn growers and ethanol producers." The report concludes that ethanol's benefits in terms of energy consumption and greenhouse gases are limited, but federal incentives have promoted significant growth in the industry. In requiring renewable fuels in gasoline, the Energy Policy Act of 2005 will continue to create demand for ethanol, CRS believes.

The report notes that in the current 109th Congress, H.R.4409 (pdf, 180KB, 89p., from GPO) eliminates the tariff for fuel ethanol, among other provisions.

Fuel Ethanol: Background and Public Policy Issues, CRS Report RL33290
(pdf, 116KB, 26p., from Open CRS)

Why higher gas prices?

Testimony on factors influencing gasoline prices, presented by the Government Accountability Office (GAO) to the Senate Judiciary Committee, was released Feb. 1 by GAO. Gas prices impact the economy because of our heavy use of motor vehicles. The U.S. consumes about 45 percent of all gasoline consumed in the world. The Energy Information Administration (EIA) calculates that every ten cents added to a gallon of gas adds $14 billion to the nation's gas bill. GAO's testimony addressed: (1) factors that affect gas prices, (2) the pattern of oil company mergers in the U.S., and (3) effects of mergers on market concentration and wholesale gas prices.

GAO found: (1) "Crude oil prices are the fundamental determinant of gasoline prices." Other factors include U.S. refinery capacity, gasoline inventories, and regulatory factors such as air quality standards. (2) In the 1990s there were over 2600 mergers involving all three segments of the U.S. petroleum industry - 85% of the mergers were in exploration and production, 13% in refining and marketing, and 2% in transportation. Since 2000 there have been 8 mergers in different segments of the industry. (3) Mergers increased market concentration in refining and marketing, resulting in small wholesale price increases from 1 to 7 cents per gallon.

ENERGY MARKETS: Factors Contributing to Higher Gasoline Prices, GAO-06-412T
     Full report (pdf, 196KB, 13p.)
     Highlights (pdf, 60KB, 1p.)
     Abstract (html)

Earlier GAO reports referred to in the testimony:

GASOLINE MARKETS: Special Gasoline Blends Reduce Emissions and Improve Air Quality, but Complicate Supply and Contribute to Higher Prices, GAO-05-421, June 17, 2005
     Full report (pdf, 1.14MB, 51p.)
     Highlights (pdf, 40KB, 1p.)

MOTOR FUELS: Understanding the Factors That Influence the Retail Price of Gasoline, GAO-05-525SP, May 2, 2005
     Full report (pdf, 3.67MB, 61p.)
     Abstract (html)

ENERGY MARKETS: Effects of Mergers and Market Concentration in the U.S. Petroleum Industry, GAO-04-96, May 17, 2004
     Highlights (pdf, 88KB, 1p.)