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This paper surveys issues affecting the supply of fuel-grade methanol for the California Energy Commission's alternative fuels demonstration programs and operations by other public agencies such as transit and school districts. Establishing stable and reasonably priced sources of methanol (in particular) and of alternative fuels generally is essential to their demonstration and commercialization. Development both of vehicle technologies and of fuel supply and distribution are complementary and must proceed in parallel. However, the sequence of scaling up supply and distribution is not necessarily smooth; achievement of volume thresholds in demand and through-put of alternative fuels are marked by different kinds of challenges.

California's experience with fuel methanol holds lessons for infrastructure development efforts for other alternative fuels and suggests strategic approaches for developing future infrastructure to serve dedicated vehicles: 1. Vehicle/engine capability to utilize “dedicated” (neat) fuels in a fuel-flexible mode; this requires large investments to meet initially small markets. 2. “Strategic dispersal”, placing stations along primary transportation corridors and in “target areas” determined by proximity to alternative fuel fleets; adopted in the California Enery Commission's M85 network. 3. Massive infrastructure development effort, coupled with the financial depth to persist until fuel throughput reaches economically sustainable levels. This approach may be unstable if tied solely to the fortunes of a single company. 4. “Strategic concentration,” the development of a dense fueling network in delimited areas, allowing the incremental deployment of dedicated fuel vehicles.