A study of the economics of alcohol-gasoline blend production

We show how to determine the value of methanol and ethanol as gasoline additives in the liquid-fuel market, where the alcohol-gasoline blends compete with unleaded clear gasolines. It is found that the clear gasolines are cheaper to produce than the alcohol blends of equivalent octane under the same refinery constraints. The results are based on the use of a combined model of the oil-refining and transportation sectors with optimised refinery operation and transport fleet. In the context of the national lead phaseout program, optimisation provided a viable route to producing the unleaded gasoline without recourse to alcohol-blending, while investment in heavy-end processing and isomerisation capacity increases the economic advantage of this route.