Current plans call for the production of synthetic gasoline, because that option yields the greatest profitability.  This is because the cost of producing methanol would be $0.91 per gallon and the carbon credits for the carbon consumed would amount to $0.08 per gallon.  Thus, the net cost of production would be $0.83 per gallon.  The wholesale price of methanol is $1.38, so the net profit per gallon would be $0.59 per gallon.  However, the same gallon of methanol would produce .4663 gallons of gasoline.  The gasoline, at a net profit of $1.37 per gallon, would yield a profit of $0.64 (.4663 x $1.37), so even with the rising price of methanol, gasoline is still more profitable to produce.  One reason for this discrepancy is that methanol has not yet become a primary fuel, even though it could become so with only minor changes to our vehicles and fuel delivery infrastructure.

Under the methanol option the two delivery barges on the 64 barge fleet would store the methanol in tanks and then be able to detach from the larger fleet and deliver the methanol to land based facilities, which could store and transport the methanol to distribution stations or to refineries.  At the refinery, the methanol would be used to produce:  gasoline; diesel fuel; jet fuel; and other products we currently use crude oil to produce, such as lubricants, plastics, paints, and other synthetic materials.  It should also be noted that if there was a methanol spill from one of the barges into the ocean, or even a river, it would mix with the water and quickly dissipate, avoiding the environmental devastation caused by a crude oil spill. 

Conventional refinement of crude oil has traditionally been driven by our need for gasoline.  The chemical breakdown in the refinement process then uses that part of the crude oil, which is not suitable for gasoline to produce diesel fuel, jet fuel, kerosene, motor oil, wax, tar, asphalt and a host of synthetic by-products such as plastics, dyes, and synthetic rubber.  However, the resulting distribution is supply driven by the process.  By using methanol as the basic feedstock for all of these products, the process can be demand driven.  Thus, the economic decisions about what products are to be produced and in what quantities, can be made on the basis of changing priorities, costs, and values, rather than on the basis of the static chemical composition of crude oil and the current refinement process.

Of course, the methanol itself can be used as fuel in internal combustion engines and turbine engines.   Although using methanol as a primary fuel is a viable alternative, it would require us to make minor changes to our vehicles and the fuel delivery infrastructure which supports them.  In addition, it would take two gallons of methanol to produce as much energy as one gallon of gasoline.   Thus, we would need to double the size of the fuel tank on every vehicle or cut the range of the vehicle in half.  Using methanol as a primary fuel would also drive up the transportation costs for fuel, as it would then take two tanker rail cars, two tanker trucks, or two pipelines to transport the equivalent fuel now carried by just one. 

Using the M85 fuel mixture of 85% methanol and 15% gasoline requires 1.7 gallons to produce the energy of one gallon of gasoline.  Thus, using M85 does mitigate 30% of the additional storage and transportation requirements.  Further, if we are able to produce lighter and more fuel efficient vehicles, we may not need to increase the size of the fuel tanks on our vehicles or increase the amount of fuel we need to transport and store.  The cost of mid-range gasoline is about 1.7 times that of M85, so the lower cost of M85 and the lower efficiency of M85 balance out.  M85 also solves some of the cold weather, hot weather, and safety problems associated with using pure methanol as a vehicle fuel.  The use of direct methanol fuel cells to power our vehicles offers still another alternative.

Under the Commercial Aircraft Alternative Fuel Initiative, hosted by the FAA, studies are being conducted to find a lower emission, non-petroleum based alternative for jet aircraft fuel.  This future jet fuel could be produced from methanol as well.  Using methanol driven turbines to produce electricity also provides an alternative to natural gas, coal fired, and nuclear powered electrical generation plants.  Dr. George Olah, a Nobel Prize winner, and his associates from the University of Southern California, advocate the evolution from a petroleum-based economy to one using methanol, in their book “The Methanol Economy”.  If such a change were to come about, vehicle fuel could be downloaded directly from the barges without having to go to a refinery.  Commercial and academic tests for both pure (neat) methanol and M85 have shown positive results including cheaper operation, enhanced engine life, and decreased pollutants.

Some experts have advocated using hydrogen as a renewable vehicle fuel, however, this would require major modifications to our vehicles.  It would also require major modifications our fuel delivery infrastructure with regards to transportation, storage and distribution because it is highly volatile.  Conversion to methanol, however, could be done with relatively few modifications because it is much more stable at ambient temperatures.  So methanol is viable for both transportation and stationary applications. An existing network of distribution and production hubs capable of being linked by barges, rail, trucks and in the future, pipelines, which could be the nucleus of a national transition to a  “Methanol Economy” within the U.S.