The Methanol Transportation Fuel Market

In testimony before a House subcommittee, GAO discussed three aspects of the widespread public use of methanol: (1) regulations and standards which may affect commercialization of methanol; (2) its potential for vehicle fleet use as a market catalyst; and (3) possible sources of methanol if a major transportation market develops. In order for methanol to come into widespread automobile use, standards dealing with quality, grade, and handling will have to be developed in cooperation with private industry. Assuming economic or other motivation for the use of methanol, the most likely potential users would initially be fleets with restricted uses, such as fleets belonging to utilities; however, this market could be limited considerably by the range of methanol vehicles and by their reduced resale value as long as the fuel is not widely available to the used-car buying public. In the United States, methanol is currently produced primarily from natural gas, but many foresee the use of domestic coal as a reason for increased production. This is one of the principal arguments in favor of the development of methanol as a means of reducing U.S. dependence on imported energy. However, GAO believes that, with lower foreign methanol prices and without a commensurate development of a domestic methanol fuel industry, the development of a methanol fuel market could result in further dependence on foreign methanol.