Publication Detail

Distribution Dilemmas in the Introduction of Alcohol Fuels


Presentation Series

Suggested Citation:
Sperling, Daniel (1982) Distribution Dilemmas in the Introduction of Alcohol Fuels. Institute of Transportation Studies, University of California, Davis, Presentation Series UCD-ITS-RP-82-03

Prepared for the Fifth International Symposium on Alcohol Fuel Technology, Aukland, New Zealand, May 13 - 18, 1982

The intent of this paper is to assess the magnitude of the distribution impediment to the introduction of alcohol fuels. Distribution systems are treated as a necessary link between production and end use activities.

A highly complex but efficient distribution system has been established in the USA to link oil refineries with petroleum product users. No such system exists for alcohol fuels, nor can existing distribution infrastructure and operations be easily adapted to alcohol. A major impediment to the introduction of alcohol fuels, then, is the absence of an in-place distribution system. The perceptions of this impediment by producer-shippers will influence to a large extent the structure and growth of an alcohol fuel industry.

The distribution link is examined in terms of the costs and constraints of transporting and storing alcohol fuels. A specific setting is selected to illustrate the opportunities for implementing alcohol distribution systems: the lightly populated but richly endowed western coal region of the USA where much of the nation's future alcohol production is expected to locate. The spatial and time-related imbalances between methanol production and demand in that region, from the time the first large coal-to-methanol plants come on line, exacerbate distribution difficulties.

A number of distribution options for exporting the excess methanol from the region are identified, but none is entirely satisfactory. The options include: sharing of the existing gasoline distribution infrastructure, immediate construction of inflexible but efficient methanol-dedicated pipelines, and temporary use of flexible but highly expensive truck and rail services until markets stabilize. Costs and risks are compared for several distribution/marketing strategies.

If these distribution costs and risks are perceived to be too high, then prospective investors would either withdraw their plans to produce alcohol or, alternatively, would convert at extra cost the high quality methanol into lower quality synthetic gasoline. In the latter case major benefits are foregone. In both cases the large-scale introduction of alcohol would be deferred, possibly forever.