Abstract:The search for petroleum alternatives is not new. Ever since the turn of the century, when petroleum became the dominant transportation fuel, authoritative sources have warned occassionally of impending oil shortages. When oil prices rose or oil depletion seemed imminent, interest and investments in oil shale, ethanol, coal liquids and gases, and tar sands surged; when oil prices subsided or estimated costs of alternatives escalated, interest and investments in the alternatives waned. Not until recently have several countries actually replaced substantial quantities of petroleum transportation fuels: Canada and South Africa built large production plants to produce gasoline and diesel fuel from tar sands and coal; Brazil replaced most gasoline with ethanol fuel; and New Zealand replaced almost half its gasoline with natural gas-based fuels.

These four countries are the exception, however. The transportation sector worldwide has remained almost totally dependent on petroleum fuels. As other energy sectors, such as electricity production, diversified into nonpetroleum sources, transportation gained a growing proportion of the world's petroleum consumption. In the United States, for instance, the transportation sector, which has relied on petroleum for 97–98% of its energy needs for decades, increased its share of the domestic petroleum market from 53% in 1973 to 63% (74% in California) in 1987. Transportation has increased its share of the petroleum market in almost every country, with the notable exception of the four countries identified above.

The virtual absence of non-petroleum fuels in the transportation sector suggests that the barriers to alternative energy are greater than in other sectors. This delayed introduction of new fuels, and the resulting dependence on petroleum, could be costly in the medium term and untenable in the long term.