With so much talk about the high cost of petroleum and the need for gasoline alternatives, it begs the obvious question, why do we remain so dependent upon a technology, which is well over 100 years old? Indeed, with so much discussion about Hybrids, Ethanol, CNG, BioDiesel, Hydrogen and so forth and so on, one would hope that this nation and other industrialized nations would rapidly embrace petroleum alternatives.

In the early days of the automobile it was not a forgone conclusion that gasoline would dominate the industry. All of the petroleum alternatives discussed today have been around for decades. The first so-called Hybrid vehicle went into operation over a century ago and ethanol, which has become the predominate fuel source in Brazil and the focus of a recent GM ad campaign (“Live Green Go Yellow”), was championed as the fuel of the future at the turn of the century by Henry Ford.

With the discovery of vast stores of oil in the late 19th and early 20th century, the cost of petroleum and petroleum by-products, including gasoline, plummeted, spelling doom for AFVs. Today as oil continues to skyrocket in price, energy alternatives have a second chance. Sooner or later such alternatives will come to dominate as petroleum reserves begin to diminish, the question is will it be a smooth transition with little or no adverse affects or will we continue to stick our collective heads in the sand only to wake up to the reality of another oil shock, Mid-East embargo, major Islamic terror strike or the depletion of the world’s oil reserves.

If the transition is to be a smooth one it must begin now and unlike the mistakes made during the nineteen teens and twenties, when all alternatives were abandoned in favor of exclusive use of gasoline, we must embrace a diversified energy strategy, just as we do in investing. Such a strategy must include legacy systems dependent upon petroleum (such as hybrid technology and use of more fuel efficient vehicles), such a strategy, must also embrace alternatives with no connection to petroleum whatsoever, including hydrogen (including both fuel cells and hydrogen internal combustion), Ethanol, SLFs, CNGs, BioDiesel, etc…

To accomplish this task the market must be allowed to function and the government must remove any and all impediments to such research and development, as well as favorable tax incentives to produce and consume such technology.

A History of Petroleum Alternatives:

First “hybrid” (gasoline-electric) vehicle: 1899 Lohner-Porsche

First ethanol-powered vehicle: 1908 Ford Model T

First Compressed Natural Gas (CNG) powered vehicle: First natural gas engine developed in 1860, used extensively in Europe and North America since 1950s.

First Electric powered Vehicle: First developed in 1832 by Robert Anderson, with mass production of electric vehicles (outselling gasoline through 1912).

First Fuel Cell powered vehicle: 1959 Fuel cell powered tractor developed by Harry Ihrig

First Hydrogen internal combustion vehicle: working engine developed in 1807, extensive use by Germany during WWII.

First Liquefied Coal (Sythentic Liquid Fuel) powered vehicle: Developed in 1930s, used extensively by Germany during WWII.