1987-11-01

Comparative Economics of Methanol and Gasoline 872061

The world has large reserves of crude oil and gas; but they are concentrated mainly in the Middle East. Eventually, economic and political factors will force the U.S. to use new domestic feedstocks for manufacturing liquid motor fuels. Among the possible alternatives are synthesizing methanol from natural gas or coal or making gasoline from coal by direct liquefaction.Methanol synthesized from domestic natural gas in a new, plant at current gas prices using demonstrated technology would cost 30% more than gasoline for equal vehicle miles. However, a program to make large amounts of methanol would likely raise gas prices. The higher feedstock cost would make the methanol even more expensive and possibly cause the methanol industry to move overseas where gas is cheaper. Because the U.S. has large reserves of coal, making methanol from coal is not likely to disturb existing supply arrangements nor raise the cost of coal significantly. However, processing to make methanol from coal is complicated and thermodynamically inefficient, and making methanol from coal would cost almost three times as much as gasoline for equal vehicle miles.Although research on direct coal liquefaction has been modest during recent years, it has yielded major technology improvements. Manufacturing gasoline from coal using demonstrated technology would use available domestic resources effectively and would be much more economical than manufacturing methanol from coal. Nonetheless, gasoline made from coal would be nearly twice as expensive as gasoline made from crude oil at current prices.We believe that government money being made available for promotion of alternative vehicle fuels would be better spent on improving processes for manufacturing alternative fuels--such as coal liquefaction--than on “demonstrating” vehicle performance on methanol-based fuels.

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