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The Economics Of Alternative Fuel Use: Substituting Methanol For Gasoline

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  • THOMAS J. LAREAU

Abstract

Alternative fuel advocates recommend substituting methanol for gasoline since methanol cars potentially pollute less. However, because the substitution is costly and the reduction of ozone precursor emissions is relatively small, using methanol raises questions about cost effectiveness. This study demonstrates that the air quality benefits would be very expensive: The cost effectiveness usually would exceed tens or hundreds of thousands of dollars per ton of reduced volatile organic compound emissions. Only if all the cost and emissions assumptions lined up favorably would methanol substitution be desirable. Even then, it would be attractive only if the energy‐adjusted price difference between gasoline and methanol were just a few cents a gallon.

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  • Thomas J. Lareau, 1990. "The Economics Of Alternative Fuel Use: Substituting Methanol For Gasoline," Contemporary Economic Policy, Western Economic Association International, vol. 8(4), pages 138-152, October.
    • Handle: RePEc:bla:coecpo:v:8:y:1990:i:4:p:138-152
    DOI: 10.1111/j.1465-7287.1990.tb00307.x
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    References listed on IDEAS

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    1. ARTHUR FRAAS & ALBERT McGARTLAND, 1990. "Alternative Fuels For Pollution Control: An Empirical Evaluation Of Benefits And Costs," Contemporary Economic Policy, Western Economic Association International, vol. 8(1), pages 62-74, January.
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