Introduction of alternative liquid fuels: some economic issues

The paper presents a review of economic issues affecting the introduction of alternative liquid fuels and discusses their implications for automobile design. The rapid changes in recent years in the economics of liquid fuel use are described and assessed. It is argued that with existing policies for allocation of fuels among uses, according to willingness to pay, will result in the owners of private motor vehicles being both willing and able to pay for liquid petroleum fuels. Economic incentives or cross subsidisations will be necessary for major use of alternative liquid fuels by private motorists - but there could be possibilities for demand for engines capable of using some alternative liquid fuels for commercial operations. An interesting possibility is for 'home brewing' of ethanol by agricultural users (a).