Brief History of Alternative Fuels

The history of alternative fuels goes back to the very first days of the car industry. In 1900, more than half the cars were running on ethanol, steam, and electricity.9 Many of Karl Benz's early diesel engines ran on peanut oil, a "biofuel." Henry Ford's first car ran on alcohol, and his wife, Clara, drove an electric vehicle. Thomas Edison invested considerable time and money in improving batteries. Electric vehicles were the safest, quietest cars on the road.

Back then, petroleum fuels were considered dangerous and in limited supply. It wasn't obvious that petroleum would dominate. But all that changed in 1901, when oil was struck at the Spindletop oil field near Beaumont, Texas, tripling U.S. oil production overnight. Several other similar gushers were found nearby in the following months.

Fears about oil supply vanished, and the death spiral of alternatives began. Gasoline's explosiveness remained an issue, but drivers, mechanics, and manufacturers learned to work around it. By the time the Model T went into production in Detroit in 1908, gasoline was firmly entrenched. Steam was in sharp decline, ethanol was relegated to occasional farm use, and electric vehicles clung to a dwindling city car market.

Gasoline's sister fuel, diesel, emerged in the 1920s to power the more durable compression ignition engines then being introduced in delivery trucks. Unlike gasoline, diesel fuel never faced any viable competitors. It was the exclusive fuel for trucks from the very beginning.

As consumers became more and more accepting of the downsides of the gasoline-powered internal combustion engine, automakers and oil companies locked in manufacturing, production, and fuel distribution processes and investments that supported this system. A vast array of pollution laws, safety regulations, and energy subsidies were built around petroleum beginning in the 1960s. The system began to take on a life of its own.

The system has now become so captive to oil that alternative fuels face huge barriers in trying to penetrate the market. Throughout the twentieth century, oil retained at least a 97 percent market share in vehicles in almost every country. Only in Brazil was it seriously challenged—but even there, gasoline's market share never dipped below 60 percent.10

For the last half century, alternative fuels have periodically benefited from public subsidies, ambitious government initiatives, political allies, and eager industry investments. Interest picked up in the latter part of the twentieth century. New Zealand and later other countries promoted natural gas. President George H. W. Bush touted methanol. Electricity companies promoted and subsidized electric vehicles, and the State of California mandated zero-emission vehicles. The U.S. Congress passed a law in 1992 establishing a goal of 10 percent alternative fuels by 2000 and 30 percent by 2010. And presidents Romano Prodi of the European Commission and George W. Bush both touted hydrogen. Time after time, calls for replacing gasoline and diesel fuel have roused public interest and sometimes spurred investments, only to fall by the wayside.

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