Goodbye gasoline? Not so fast

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HOUSTON (CNNMoney.com) -- Gasoline use over the next two decades is expected to soar as developing nations get richer and more people there buy cars, but gas alone won't be able to shoulder the burden.

Along with their surging economies, the number of cars in India and China is expected to jump to 1.2 billion by 2050 from 20 million just a few years ago.

"Will oil be able to supply this increase in demand?" Dalton Perras, a director at Cambridge Energy Research Associates (CERA), asked at the group's annual energy conference here in Houston. (See correction below)

It will certainly supply a lot of it, he said. Dalton expects oil use in the worldwide transport sector to jump 50% by 2030. But it will need some help to meet the world's energy needs.

Experts here say the fuel mix of the future must rely not just on gasoline, but a variety of sources - everything from biofuels and electric power to synthetic fuels, natural gas and greater efficiency will all help meet this growing demand.

Although diversifying the world's fuel sources may help meet growing demand, the development of alternative fuel sources is still in a nascent stage with serious ecological and humanitarian concerns remaining unclear.

The biofuel "solution." There have been many questions asking if corn-based ethanol is actually any better than gasoline when it comes to reducing greenhouse gasses. And their growing use has been attributed to rising food costs worldwide. Largely because of these concerns, the energy bill recently signed into law by President Bush says a big chunk of future biofuels must come from non-food crops like switch grass and corn stalks.

CERA predicts biofuels in the U.S. will go from about 2 percent of the current fuel mix to 15 by 2022, as mandated in the new energy law. In South America, biofuel use could make up 25 percent of the continent's fuel mix, led by Brazil's sugar-based ethanol industry. The Europeans, long fans of diesel engines, are also expected to boost their biodiesel use.

Because ethanol is difficult to transport and store, that opens the door for other biofuels like biobutenol and methanol to take a share of the biofuel market, said Tiffany Groode, an associate director at CERA.

Electricity and the plug-in hybrid. The electric industry is also expected to help meet future vehicle fuel needs, as more cars utilize "plug-in hybrid" technology. Hybrid cars are powered by both gasoline and electricity. In most of today's hybrids all the power is generated on-board by the gasoline engine. A plug-in hybrid can also take in electricity from a wall outlet, greatly extending its range.

Plug-in hybrids can lift a lot of the load from gasoline's shoulders, if plug ins suddenly replaced all the vehicles on the road today, electricity use would rise by only a sixth while oil use would fall by two-thirds, said Dalton.

But plug-in electric vehicles, which would need power outlets at parking lots nationwide, face the same infrastructure challenges as cars that run primarily on biofuel.

Groode said only 2 to 3 of the vehicles in the U.S. can use a fuel mix containing more than 10 percent ethanol. Problem is, no one wants to buy the vehicles because there are very few gas stations that sell a mostly ethanol blend. But gas stations don't want to put in the ethanol pumps because so few people drive those cars.

'It's kind of a chicken and the egg thing," she said.

Tuning up fuel efficiency will also play a role. It's essential for the automotive industry to have clearer picture on the future price of fuel, as well as future fuel mixes like those containing the biofuel they may be required to use, according to Julius Pretterebner, a CERA Director.

But even with biofuels, plug-in hybrids, and greater efficiency, oil will still play a central role to meet demand from many people buying cars.

"We see conventional fuels today, we saw them in the past, and we will see them in the future," said Pretterebner.

Correction: An earlier version of this story misidentified Dalton Perras as Jim Dalton.