Analyst touts methanol-blending in gasoline for North America

11 April 2012 21:26  [Source: ICIS news]

HOUSTON (ICIS)--Momentum is building for methanol blending in gasoline in North America, an analyst said in Wednesday.

Steve Hansen an analyst with the Raymond James brokerage in Vancouver, British Columbia, said in a research note that political momentum is growing in the US for blending methanol into gasoline  to end oil’s “near-monopoly” on transportation fuels.

In a note touting Canada-based producer Methanex, Hansen said methanol has several advantages over competing fuels.

Among those advantages, Hansen said methanol is cheap to produce, especially considering the falling price of natural gas. Methanol also is a high octane fuel, which is favoured by engine manufacturers, and it can be made from multiple feedstocks that are in huge abundance.

However, Hansen added a caveat, saying it would probably be at least five years before large amounts of methanol would be blended for US auto fuel.

“Still,” Hansen added, “as the political momentum builds, so too does our conviction that methanol blending will once again return to North America as a niche component of a broader energy strategy aimed at reducing oil’s grip on the transportation fuels market—much like it already has in China.”

Hansen’s note joins a recent flurry of pro-methanol publicity, editorials and studies.

In March, the Methanol Institute,  a US lobbying organisation, wrote a letter to US senators Harry Reid and Mitch McConnell in support of the Open Fuel Standard Amendment, which would require 50% of all new cars to be flex-fuel vehicles that operate on something besides just gasoline.

A big negative for methanol is that it has a lower energy content than regular gasoline.

“Methanol produces about half the energy per gallon as gasoline, so you need to burn twice as much to go just as far,” said former Bush Administration Homeland Security Chief Tom Ridge and former Bush Secretary of Transportation Mary Peters in a February The New York Times opinion article.

However, the current spot price of methanol ($1.16/gal, €0.23/litre) is only about a third the cost of a gallon of gasoline ($3.95/gal at Houston fuel stations on Wednesday).

Despite its potential energy content drawback, Ridge and Peters promoted the use of methanol as an alternative auto fuel.

They cited a study in 2011 by the Massachusetts Institute of Technology (MIT) that called methanol “the liquid fuel that is most efficiently and inexpensively produced from natural gas”.

($1 = €0.76)

By: Lane Kelley
+1 713 525 2653

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