A wide variety of countries have, at various times, explored the use of either methanol or ethanol alcohol fuels as alternatives to diesel and gasoline fuels. Recently the United States has demonstrated light and heavy‐duty vehicles using alcohols but has not yet passed beyond the use of limited amounts of alcohols as gasoline components. The potential benefits of alcohol fuels include increased energy diversification accompanied by some energy security and balance of payments benefits, and air quality improvements. The Clean Air Act of 1990, emission standards set out by the State of California, and the 1992 Comprehensive National Energy Policy Act may serve to encourage the substantial use of alcohol fuels, unless gasoline and diesel technologies offer comparable advantages. Both methanol and ethanol have high octane values and allow high compression ratios providing increased efficiency and improved power output per cylinder. The properties of methanol and ethanol result in different vehicle fuel storage considerations. Unlike gasoline or diesel fuel, the vapor of methanol or ethanol above the liquid fuel in a fuel tank is usually combustible at ambient temperatures. This poses the risk of an explosion should a spark or flame find its way to the tank such as during refueling. The 85% methanol–15% gasoline fuel in use in California and elsewhere is commonly called M85. If methanol is to compete with conventional gasoline and diesel fuel it must be readily available and inexpensively produced. Thus methanol production from a low‐cost feedstock such as natural gas or coal is essential. Ethanol is primarily produced from a variety of crops and crop by‐products, generically called renewable biomass. In general, the low cost estimates for alcohol fuels indicate that methanol produced on a large scale from low cost natural gas could compete with gasoline when oil prices are around 14¢/L ($27/bbl). The future market response to new forms of emissions regulation is unknown. It is possible that the new emissions standards will simply result in improved gasoline technologies, and that the market result of the new standards will simply be cleaner gasolines. However, in 1990 the U.S. Alternative Fuels Council agreed on a goal of a 25% share of nonpetroleum transportation fuels by 2005. Alcohol fuels could capture a large part of this 25% share of nonpetroleum fuels.