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Air pollution from automobiles is a serious problem in major metropolitan areas in the United States. It has been suggested that adding higher alcohols derived from coal to gasoline may help to reduce some of the more toxic emissions from automobiles and also extend the gasoline pool. The main objective of this study is to systematically assess the economic cost of producing coal derived alcohols for use in this capacity under conditions of uncertainty and to identify any relevant production and supply constraints. Four coal cases representing different feed-stocks and modem gasification technologies are employed in the analysis, and two natural gas reference cases are provided since similar products can be derived from natural gas. The major conclusions are that coal derived alcohol fuel oxygenates (CDAFO's) may not be currently-competitive with MTBE, but would be currently competitive with ethanol in the absence of the federal ethanol subsidy. Further, environmental benefits of CDAFO's may be greater than those for MTBE or ethanol in terms of COx and NOx emissions. However, there is no market price mechanism to account for these added benefits. This studies shows that these benefits would have to be worth at least {dollar}0.07/gal if CDAFO's produced by the best process using a combination of coal and natural gas were to replace MTBE and \\{dollar}0.05/gal if they were to replace federally subsidized ethanol. If CDAFO's were produced by the best all coal alternative then the benefits derived from the adoption of CDAFO's would have to be worth at least {dollar}0.21/gal to replace MTBE and \\{dollar}0.19/gal to replace federally subsidized ethanol. If the federal ethanol subsidy were to be removed, all of the CDAFO's technologies with the exception of the Lurgi would be more economical than ethanol. Finally, this study shows that many costs of producing CDAFO's and benefits of using them are highly uncertain, and that the level of uncertainty of these benefits and costs could easily change the relative economics among competing oxygenates.