The term "alcohol" refers to a group of organic compounds that have a vast range of forms and uses in cosmetics. There are good alcohols and bad alcohols, as we explain below.
When fats and oils are chemically reduced, they become a group of less-dense alcohols called fatty alcohols that can have emollient properties or can become detergent cleansing agents. In some benign forms, they are glycols used as humectants that help deliver ingredients into skin.
When alcohols have low molecular weights they can be drying and irritating. The alcohols to be concerned about in skin-care products are ethanol, denatured alcohol, ethyl alcohol, methanol, benzyl alcohol (when it’s among the main ingredients), isopropyl alcohol, and SD alcohol, which can be extremely drying and irritating to skin, as well as capable of generating free radical damage and disrupting skin's protective barrier.
There is actually a significant amount of research showing alcohol causes free-radical damage in skin even at low levels. Small amounts of alcohol on skin cells in lab settings (about 3%, but keep in mind skin-care products use amounts ranging from 5% to 60% or greater) over the course of two days increased cell death by 26%. It also destroyed the substances in cells that reduce inflammation and defend against free radicals—this process actually causes more free-radical damage. If this weren't bad enough, exposure to alcohol causes skin cells to self-destruct! The research also showed that these destructive, aging effects on skin cells increased the longer exposure to alcohol occurred two days of exposure was dramatically more harmful than one day and that's at only a 3% concentration (Sources: Journal of Investigative Dermatology, August 2009, pages 20–24; "Skin Care—From the Inside Out and Outside In," Tufts Daily, April 1, 2002; Alcohol, Volume 26, Issue 3, April 2002, pages 179–190; eMedicine Journal, May 8, 2002, volume 3, number 5, www.emedicine.com; Critical Reviews in Clinical Laboratory Sciences, April 2001, pages 109–166; Cutis, February 2001, pages 25–27; Contact Dermatitis, January 1996, pages 12–16; and http://pubs.niaaa.nih.gov/publications/arh27-4/277-284.htm).
When these ingredients are at the top of an ingredient list it is problematic for all skin types; when they are at the end of an ingredient list, there isn't enough concentration present to be considered a problem for skin.
Those with oily skin should avoid high amounts of the problematic types of alcohol mentioned above. These types of alcohol show up in numerous products aimed at oily or acne-prone skin. The problem? In addition to alcohol's other detrimental effects, topical application can stimulate nerve endings in the skin, causing inflammation that encourage excess oil production at the base of the pore (Sources: Archives of Dermatologic Research, July 2008, pages 311–316; Dermatology, January 2003, pages 17–23; and Medical Electron Microscopy, March 2001, pages 29–40). Initially, your skin will be de-greased from the alcohol’s drying action, but in short order the oil will be back, often worse than before.