Motorized vehicles run on gasoline because crude oil became cheaper to refine than making grain alcohol from plants, according to National Geographic. In the early 1930s, a gallon of gasoline cost 10 to 13 cents, whereas a gallon of ethanol was 25 cents, notes historian Bill Kovarik, Ph.D.
Two political assertions in early 20th century America favored petroleum-based gasoline. Alcohol was taxed more heavily than oil until 1906, with a $2.08 tax on the commodity in place since the Civil War. Gallons of pure ethanol began selling for 25 to 30 cents per gallon after Congress repealed the tax in 1906, says Kovarik. Simultaneously, petroleum-based fuels sold for 18 to 22 cents a gallon. New oil fields in Texas created greater supplies of kerosene and gasoline during this time. The price of petroleum went down even further, which made gasoline a lower-cost option.
Prohibition during the 1920s, and then the Great Depression of the 1930s, ignited debates in Congress between competing interest groups. Standard Oil touted an experiment in the early 1930s that revealed ethanol-based fuels were faulty. Midwestern farmers, trying to earn more money, pushed for grain-based fuels, notes Kovarik. In a compromise, Congress mandated some fuels contain a 10 percent mix of ethanol with gasoline.
By the 1940s, even more vast oil fields opened in the United States, according to The Auto Channel. Processing plant-based fuels cost more money and took more time, so petroleum-based fuels became the norm in car engines starting in World War II.