File this in the drawer marked "how little things change." In the March 18, 1906 NYT there is an article discussing the increase in the price of gasoline, local consternation about the price increases, and what to do about increasing the number of alternatives to gasoline for automobiles and cooking.

The wholesale price of gasoline had "increased" to 14.5 cents per gallon for high-grade and 12.5 cents for lower grade gasoline in the U.S. The retail price in the U.S. was reported as between 14.5 and 20 cents per gallon (in 2004 CPI adjusted dollars between $3.03 and $4.18 per gallon), depending on how much gasoline you purchased at a time. Likely most gasoline users were paying closer to the 20 cents per gallon. Unfortunately, there was no mention of how much the price had increased. However, in England, the story reported a 4 cent increase in the price per gallon over the "past several months' (approximately $0.84 in 2004 CPI adjusted dollars). If the increase in England was similar to the increase in the U.S., this would represent an increase in price of approximately 20-25%.

The increase in price motivated the Automobile Club of America to offer an X-prize type reward for an alternative fuel to gasoline - in essence asking for advancement in a backstop technology. Sound familiar? The primary difference between then and now was the lack of government dollars being thrown (wasted) on the problem.

The primary candidate in 1906 was alcohol. (One hundred years later our government still focuses on alcohol-like substitutes for gasoline!!) Just like today, unfortunately, there were difficulties in making efficient alcohol-burning engines. However, the problem wasn't just the engines.

As the article points out:

No serious attempt has ever been made in this country to show a large number of motor users just what can be accomplished by the use of alcohol as fuel. One great drawback has been the high internal revenue tax which has made no discrimination between the highest grades of alcohol and the lower or denatured grades. A bill is now before Congress to remove the tax from grain alcohol used for industrial purposes, and although little public attention has been paid to it, the progress of the bill has been watched with care by autoists and farmers alike. [emphasis added]

One hundred years ago, our government's tax policy might have dissuaded the development of alcohol as an alternative fuel. Could today's tax policy, namely the heavy subsidization of ethanol, dissuade the development of some non-government-inspired alternative?

Perhaps today's market for a viable alternative fuel, even if it isn't the government-preferred version, is so large that government subsidies/taxes have less power to alter the evolution of the market compared to 1906?