Experts warn that it won't be easy to get off of petroleum or reduce how much the world uses. The amount of energy per liter derived from petroleum is far better than most of the alternatives, a worldwide infrastructure based on it already exists, and people tend to be lazy--seeking out alternative fuels takes some effort.
If oil drops below $55 a barrel, most of these alternatives stop becoming attractive, says Dan Arvizu, director of the National Renewable Energy Laboratory. And the Organization of the Petroleum Exporting Countries is watching what is going on in alternative fuels and can gauge oil prices accordingly.
"We do have a problem with how serious we are about our energy challenges," he said.
Global warming and improving technology, however, are making the alternatives more realistic all the time. Here's a guide to the main alternatives.
What: Ethanol is an alcohol produced out of corn, sugar cane or other food crops. During the production process, the plant material goes through several stages of heating and reduction. Ethanol is typically mixed with gasoline. Some cars can run on a mix of 85 percent ethanol and 15 percent gas, but ethanol is most commonly used as an additive in smaller percentages. , but they usually only put small amounts in their cars: many states now use it for a substitute for MTBE, a common fuel additive with potential health risks to humans and other animals.
Pros: Ethanol pollutes less than regular gas. And we already know how to make it in large volumes. Brazil uses ethanol made from sugar cane extensively. Investors are pouring billions of dollars into ethanol refineries in the U.S. There are 109 ethanol plants in the U.S. and 40 new projects coming on line, according to Michael Eckhart, president of American Council on Renewable Energy (ACORE).
Cons: Where to begin? First, food crops aren't an ideal fuel source. An acre of corn produces 480 gallons of ethanol, according to Paul McCroskey, chief financial officer at Ceres, which makes enzymes for the fuel industry. That's a lot of land.
Ethanol only puts out two-thirds the energy of gas, so car mileage is lower on ethanol. Ethanol production also generates tons of carbon dioxide, which, if it's not captured turns into greenhouse gases. Producing ethanol also requires lots of energy. It's popular, say some, because farmers love it, and they tend to show up on Election Day.
To top it off, the price of corn is climbing, while gas prices are declining. In January 2006, ethanol sold for $3 a barrel, while a bushel of corn cost $2. Now, ethanol sells for $2 per barrel and corn goes for $4.20 a bushel, according to ACORE. "We have seen the most profitable space in the fuel business disappear in a year," said Eckhart. OPEC, he added, will lower oil prices to put pressure on the ethanol industry.
2. Cellulosic ethanol
What: Cellulosic ethanol is also an alcohol, but it's made out of wood chips, corn stalks and agricultural waste products. Some scientists also believe cellulosic ethanol can be produced out ofthat require little fertilizer and water and could grow in the windswept plains of South Dakota.
Pros: The feedstock dilemma essentially disappears. The vegetable matter used in cellulosic ethanol has almost no value, which will mean margins won't get compressed by commodity price shifts, and critics can't argue that food crops in a hungry world are going to cars., and other companies are also devising ways to convert the high-cellulose waste matter into alcohol with microbes and enzymes, thereby and total greenhouse gas emissions.
The goal is to get cellulosic ethanol to the point where the "real" cost per gallon will run you $1.62, according to Arvizu. (The real cost is how much ethanol it will take to go as far as a gallon of gas will take you. Typically, 1.67 gallons of ethanol equal 1 gallon of gas.) By contrast, the "real" cost of standard ethanol is close to $3.50 or more now, he added.
Cons: It pretty much only exists in labs right now, but larger-scale production is coming. Mascoma plans to open a trial plant that can produce 500,000 gallons a year.
"It (commercial cellulosic ethanol production) used to be five or six years out, but we could get it done in three years. The key is being able to build a plant that can do one to two million gallons," said William Baum, executive vice president of, which finds microbes in exotic locales and puts them to work.
Like regular ethanol too, cellulosic faces a retail problem: the stations emblazoned with Shell or ChevronTexaco signs won't be clamoring to carry it. That's partly why only 1 percent of U.S. stations--mostly independents or pumps at grocery stores--serve ethanol.
3. Poo-troleum and fish-tank fill-up
What: It turns out you don't have to compress dinosaurs and plants for millions of years in the earth's crust to get petroleum. You can make it.in Israel says it has adapted the Fischer-Tropsch process for turning coal into petroleum to turn human sewage into petroleum.
Meanwhile, in the States, is working with Sandia National Labs to refine a technique for converting algae into petroleum. The dinosaurs actually had little to do with our modern-day tar pits, said CEO Lissa Morgenthaler-Jones. The big oil fields, such as the ones in the North Sea, were actually created by algae, she claimed.
Pros: No one really wants the feedstock. LiveFuels says it can potentially get 10,000 gallons of useable hydrocarbons for an acre-size pond a year. The hydrocarbons would be boiled down into useable diesel or petroleum. The ponds would be fed by farm waste water.
"This stuff loves agricultural run-off," Morgenthaler-Jones said.
Cons: It's experimental with a capital E, so no one knows what the costs will be or whether it can work on a broad scale yet. Plus, there is the greenhouse gas question. These fuels are carbon neutral in the sense that no carbon will be dug up from beneath the earth and ejected into the atmosphere. These fuels rely on carbon that's already on the surface in the form of waste or algae and it will decompose. Still, it's petroleum, so CO2 still comes out of the tailpipe.
What: It's diesel fuel made out of soy, palm or other vegetable oils. The drippings from a deep fat fryer can run a diesel car, as long as you filter it and. Biodiesel refiners essentially do the filtering for consumers. There are 85 biodiesel plants in the U.S. and 65 in construction, according to ACORE.
Pros: It's got far fewer economic and environmental hurdles than ethanol, says Martin Tobias, a former Microsoft exec who now runs Imperium Renewables, a biodiesel maker. Diesel cars are very popular in Europe, and several manufacturers make high-mileage diesel cars. Some truck and bus makers already produce. Biodiesel could be sold to those people right now. And since industrial diesel users buy their fuel directly, they don't have to worry about corporate service stations snubbing biodiesel altogether.
Finally, biodiesel puts out far less carbon gases. Sulfur can be a problem with soy-based biodiesel, but Tobias says it can be contained.
Cons: Farming sometimes isn't the most eco-friendly activity, and some worry that a surge in demand for palm oil will lead to slash-and-burn agriculture and pollution in the tropics. Advocates, though, say that farmers are tackling this problem. One group in Colombia is growing biodiesel feedstock on old coca plantations..
Even after the new facilities get built, biodiesel is a drop in the bucket of the world's fuel needs. There are only 150 million gallons of the stuff produced a year in the U.S. and, although that number will climb to 250 gallons this year, the U.S. consumes about 62 billion gallons of diesel a year.