An exhaust heater system includes an exhaust heater and an air supply tube disposed within the exhaust heater. Relatively hot exhaust gas from an engine is directed into the exhaust heater, whereby heat from the exhaust heats the interior of the air supply tube. The heat partially vaporizes liquid methanol injected into the air supply tube. To control the amount of heating, the exhaust can be directed to the air supply tube as well as an exhaust bypass, whereby exhaust directed to the exhaust bypass does not heat the interior of the air supply tube.