NOVELTY - Preparation of methanol from a methane source without first producing syn-gas involves oxidizing methane to produce a mixture of methanol and formaldehyde with smaller amounts of formic acid and carbon dioxide; converting the formaldehyde to form methanol and formic acid or methyl formate; and subsequently hydrogenatively converting the methyl formate to form methanol.    USE - In the preparation of methanol useful for producing dimethyl ether (which is a substitute for natural gas and liquefied petroleum gas (LPG) for heating purpose for households or industrial use), ethylene or propylene, and dimethyl carbonate that produces improved diesel fuel; for producing transportation fuel; as convenient energy storage and transportation material; and for preparing single cell proteins for human or animal alimentation (claimed); as starting material for chemicals such as formaldehyde, acetic acid and other products such as polymers, paints, adhesive, construction materials, synthetic chemicals, and pharmaceuticals; and as building blocks for producing synthetic hydrocarbons and their products.    ADVANTAGE - The methanol produced by the method can provide transportation fuel with the fuel having minimum gasoline content of at least 15 vol.%. The methanol and dimethyl ether produced can be effectively use as energy storage and transportation material as it minimizes or eliminates the disadvantages or dangers inherent in the use and transportation of liquefied natural gas (LNG) or LPG. The method provides methanol in high yield, with improved selectivity, and oxidation conversion. The method is safe and versatile. The direct conversion of natural gas such as methane to methanol or dimethyl ether allows ready and safe transportation of fuel when pipelines are not feasible or available and provides a safe alternative to transporting natural gas. The methanol produced by the process provides raw material for METHANOL ECONOMY (RTM: process) allowing convenient storage of energy in liquid product that can be used as fuel in direction oxidation methanol fuel cell.