Alcohols can be used directly as fuels and fuel additives or as intermediates to form high octane or high cetane ethers. Catalysts have been improved to synthesize the higher alcohols, especially isobutanol, from coal- or natural gas-derived H-2/CO synthesis gas, and reaction engineering approaches are being investigated to further increase the activities and selectivities of the reactions forming the higher alcohols. These approaches include (a) using a dual catalyst bed reactor for gas phase conversions and (b) employing a slurry phase reaction system for increasing the reaction rate of the exothermic synthesis reactions. These developments have led to higher alcohol productivities. For example, with double bed Cs/Cu/ZnO/Cr2O3 catalysts, productivities of isobutanol and total alcohols as high as 202 and 947 g/kg catalyst/h, respectively, have been achieved. However, declining petroleum prices over the last three years have pushed the economic break-even point to even greater productivity levels of isobutanol and of a mixture of the higher alcohols. It is shown that alcohols and certain ethers have desirable properties as octane enhancers, while other ethers could be used as additives to enhance the cetane number of diesel fuel. (C)2000 Elsevier Science B.V. All rights reserved.