Degree Name

Master of Business Administration (MBA)

Semester of Degree Completion

1979

Thesis Director

John T. Moore

Abstract

The major emphasis of this study is the economic feasibility of the use of alcohol-gasoline blends (gasohol) and alcohol fuels; but all major issues concerning the use of gasohol and alcohol fuels are explored. The specific objectives of the investigation include the determination of the specific performance properties of the fuels, their pollutant emissions (compared to gasoline), and their costs compared to gasoline.

While opponents to the use of alcohol fuels are more vocal than proponents, citing high cost and the lack of raw materials as objections, proponents believe new processes that can use any cellulose containing material as a feedstock appear to be the hope for production of the large quantities of ethanol required to replace gasoline. Production costs of the new process are less than production costs of traditional ones because of credit for by-products and the less energy-intensive fuel grade distillation requirements (as compared to beverage distillation requirements).

In considering the economic feasibility of the use of alcohol fuels as compared to the use of gasoline, one might notice that the price of Saudi-crude has risen from $1.80 per barrel in 1970 to $18.00 per barrel in July, 1979. Projecting the crude oil, refining, and mark-up cost, by the "least squares" method, equations were developed for the price of gasoline. The gasoline price equation was then used to make projections of the future price of gasoline. Another method used to determine the future price of gasoline was the "inflation method." The points at which the price of gasoline equals the price of alcohol fuels were depicted graphically.

Based on April, 1979, data, "Gasohol" may be sold for 1.6 cents lower to 1.2 cents higher (per gallon) than regular unleaded gasoline. Ethanol made by farm operators is competitive with gasoline. Methanol may be competitive with gasoline now (depending on the feedstock used). Sometime during the 1980's ethanol produced by commercial processes should become economically feasible.

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