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This ingredient gets a bad rep because it is irritating and drying due to its astringent property. Astringents draw out natural oils in tissue to constrict pores and dry out your skin.

However, alcohol denat. is not all that bad.

Due to its low molecular weight, alcohol denat. tends to evaporate quickly. One study on pig skin found half of applied alcohol evaporated in 10 seconds and less than 3% stayed on skin.

This also helps other ingredients become better absorbed upon application.

Studies are conflicted about whether this ingredient causes skin dehydration. One study from 2005 found adding emollients to propanol-based sanitizer decreased skin dryness and irritation. Another study found irritation only occurs if your skin is already damaged.

Small amounts of alcohol are generally tolerated by oily skin or people who live in humid environments.

The rule of thumb is this ingredient will probably not affect your skin much if it is near the end of an ingredients list.

One thing to note:
People with ALDH2 (aldehyde dehydrogenase 2) deficiency may experience skin irritation from continued alcohol use. About 8% of the world's population have this deficiency.

The Cosmetic Ingredient Review Expert Panel has determined denatured alcohols to be safe for use in concentrations between 0.05% and 12% (depending on which denaturant is used).

Also...

This ingredient has antimicrobial and solvent properties.

The antimicrobial property helps preserve products and increase their shelf life. As a solvent, it helps dissolve other ingredients.

Look for formulas that contain glycerin, hyaluronic acid, or panthenol if you want to offset any drying effect.

This ingredient will trip away your skin's natural oils/lipids that help it lock in moisture. This can worsen dryness, trigger eczema flare-ups, and aggravate rosacea.

Be sure to patch test any product with this ingredient if you have dry or sensitive skin, eczema, or rosacea.

Here's an interesting thing about Arginine: your skin converts it into urea through the Krebs-Henseleit urea cycle. Urea is one of the most effective humectants your skin naturally produces.

A clinical study showed applying 2.5% arginine hydrochloride to atopic dermatitis skin showed significant urea levels in the stratum corneum and improved moisture in just four weeks.

Arginine is also a precursor to nitric oxide; nitric oxide improves microcirculation and supports wound healing and collagen synthesis.

One study found that an amino acid complex containing Arginine reduced skin irritation, improved hydration, and accelerated skin repair in clinical / in-vivo studies.

Arginine itself is an amino acid and not a fatty acid, oil, or ester. On its own, it's not a direct food source for Malassezia, or the yeast that causes fungal acne.

Typical use levels range from 10-20% in cleansers and 15-30% in shower products.

Once on your skin, your skin's glucoside hydrolases breaks it down into glucose and the parent fatty alcohols.

This ingredient is considered fungal acne safe because its fatty alcohol portion sits outside the Malassezia yeast's metabolization range.