The fuel has few advocates on Capitol Hill and is largely unknown by the public, he said. Also, until recently, the methanol industry barely existed in the United States.

The shale revolution could drastically change that. And with greater collaboration among the industry, government and auto manufacturers, methanol could displace gasoline, reducing expenses and U.S. reliance on foreign oil.

Already, the industry is starting to ramp up. Methanex, the world’s largest methanol supplier, announced last year that it will move two methanol plants from its site in Chile to Geismar, La. The U.S.-based company G2X Energy broke ground on its first methanol plant outside of Pampa, Texas, last year and is set for completion this spring.

The ‘chicken and egg’ dilemma

As Congress debates exporting natural gas, Luft argued, developing natural gas transportation fuels on U.S. soil for domestic use would produce far greater economic benefits. The price of natural gas per 1 million British thermal units is about $4.30, whereas oil costs roughly $17 per million Btu, giving natural gas a significant cost advantage.

“Why export gas and import oil if you can use the gas domestically to replace oil?” he said. “Might as well keep the gas at home, make fuel, and then you have to import less oil.”

Methanol also has benefits over other fuels derived from natural gas.

A 2011 study on the future of natural gas by the Massachusetts Institute of Technology, chaired by former MIT professor and current Energy Secretary Ernest Moniz, found methanol to be the most advantageous type of transportation fuel derived from natural gas. It determined that methanol could be a cost-effective, low-carbon alternative to gasoline with far lower infrastructure costs compared to compressed natural gas or liquefied natural gas.

“We were motivated by the view that it’s a lot cheaper to modify a vehicle to use a room temperature liquid fuel than to run on high-pressure compressed natural gas or liquefied natural gas, there’s a large incremental cost in those cases,” said Daniel Cohn, a research scientist at MIT and author of the report, “whereas, if we could produce a fuel like gasoline or diesel … the incremental cost could be very low, perhaps even zero, and the infrastructure change would be minimal or zero.”

But like some other alternative fuels, methanol faces a chicken-and-egg dilemma. Fuel makers are hesitant to produce the fuel until there are cars available to run on it, and automakers are hesitant to make methanol-compatible cars until the fuel is more widely available.

Can methanol find congressional support?

To overcome this hurdle, advocates have called on Congress to create fuel choices at the pump by adopting an open fuel standard that would require auto manufacturers to ramp up the production of flex-fuel vehicles that can run on gasoline, ethanol and methanol.

Since the high octane levels in methanol allow automakers to use smaller, direct injection engines that improve the overall efficiency of their vehicles, advocates also called for U.S. EPA to offer incentives for flex-fuel vehicles as part of the corporate average fuel economy standards.

Another step the administration needs to take is to certify methanol fuel, according to several participants.

“In order for methanol fuels or alternative fuels to catch hold, they need to be certified, tested and standardized,” said former Louisiana Sen. Bennett Johnston (D). A green light from the government would give consumers confidence that the fuel is safe and give automakers confidence that the fuel won’t damage their vehicles, he said.

Automakers aren’t going to offer warranties for flex-fuel cars that can run on methanol until EPA approves midlevel fuel blends for use, said Robert McFarlane, co-founder of the U.S. Energy Security Council. Like ethanol, depending on the blend ratio, the alcohol fuel can damage certain automotive parts.

McFarlane said he believes that with Moniz and EPA Administrator Gina McCarthy, both alternative fuel advocates, leading their respective agencies, there is a “good opportunity” to garner more support for methanol.

According to Matt Brusstar, deputy director of EPA’s National Vehicle and Fuel Emissions Laboratory, EPA is supportive of methanol and has been looking at methanol technology in the laboratory for years. The agency is now actively examining opportunities to use the fuel in heavy-duty vehicles.

The concern surrounding methanol production, he said, is that it can be derived from coal, as well as natural gas and renewable feedstocks, which would give the fuel a far larger carbon footprint than gasoline.

“At this point, we don’t have the ability to say that people can’t make methanol from coal or any type of fuel from coal, but if that goes out of the realm of hypothetical, we’d certainly have to consider what action would be prudent,” Brusstar said.