How The War Between The States has a direct link to 

Climate Change and the Gas Crisis.

By Hal Doby, February 17,2014
Based in part on an article "A brief history of biofuels, from the Civil War to today" By Dustin Driver 

After the start of the 20th Century, America, as well as the rest of the industrialized world, developed a huge dependence on energy derived from fossil fuel sources, primarily crude oil, natural gas, and coal. For decades we were content to use these sources of energy because of their relative low cost. When I was born in 1958, I believe gasoline had yet to climb above twenty-five cents for a gallon of regular gasoline. Thanks to the low cost, gas was plentiful and our cars had become large and massive, just like the dinosaurs that once roamed the Earth. 

Then in the early 1970s, a group of small nations, had formed a coalition called OPEC (the Organization of Oil Exporting Countries). They decided to impose an oil embargo on the United States and other allies of the small state of Israel. Gasoline costs leaped into the stratosphere, going from around that quarter figure to a whopping fifty cents a gallon! All of a sudden, we were scrambling to find alternatives sources of fuels as was as ways to use gasoline more efficiently. 

Part of that effort led to the introduction of biofuels into the market. It was hailed as a miracle of modern technology that promised to help solve our energy problems. Not only were biofuels a renewable source of energy since it's source was "grown" and the Americas were agriculturally quite strong, it was a mcu cleaner buring fuel that made environmentalists much more friendly to it. The environmentalists became champions of biofuels. As a stop-gap measure, some oil companies such as Citgo, developed major sales campaigns for a ten percent Ethanol/Petroleum blend they called Gasohol. Today, most gasoline that is available today is composed of this blend. 

While many think biofuels are a modern invention, yet they are far from it. In fact, our first fuels were what we today call biofuels. Biofuels are made from vegtable-sourced organic matter through fermentation or extraction. While you can make biofuels from virtually any type of plant material, plants with a high sugar content such as corn or sugar cane make better burning biofuel than others. 

The term "biofuel" is a late 20th century term. Let's rephrase this and all might come into focus. Throw some corn husks in a fermentation tank with some friendly bacteria, and you’ll eventually get the most common form of biofuel: Alcohol!  Squeeze oily plants (like peanuts), and you’ll get another form of biofuel you can burn in such things as lamps. That use goes back to before biblical times. These forms of biofuels have been used for millennia, going back well into antiquity. Come forward to the 19th Century and during the beginnings of the Industrialized Age, some of the very first internal combustion engines were designed to run on these biofuels. By the mid-1800s, there were a number of engineers and inventors that based their internal combustion engine on using grain alcohol and peanut oil as the source fuel for their contraptions. 

In 1826, American Samuel Morey ran a prototype engine on alcohol. In 1860, Nikolaus Otto, inventor of the Otto-cycle engine, burned ethyl alcohol in his engines. It seemed that alcohol would be the dominant liquid fuel of the burgeoning Industrial Revolution. Believe it or not, the diesel engine was originally designed to operate on peanut oil. Later on, the Ford Model T was capable of running on alcohol as were other early automobiles. 

In 1861, the secession movement took hold and the first States left the Union to form the Confederate States of America. The main reason that the Confederate States chose to leave the Union was due to what they considered unfair taxation. In very short order, the United States found itself not only without its agricultural dynamo as a source for biofuel-sourced energy, but it found itself with the major revenue source the kept the government running. As Abraham Lincoln chose to the military option to put the nation back together, the Union struggled to find ways to finance the war effort as well as to keep itself funded. . 

The Unionbegan to print a large amount of treasury notes, otherwise known as paper money. When you suddenly place large amounts of printed money into the  public's hands, it usually causes inflation and that's exactly what occurred. In short order, the Union was suffering from runaway inflation. To curb that, The Federal Governement had to increase the amount of money in its Treasury to balance out the money it had printed. In order to do that, the Union created a new  system of internal taxation, the biggest and most extensive to date in the history of the young country. They called it the Internal Revenue Act of 1862. Along with new taxes on luxury and what was considered to be “sin” items, this included a very high tax on alcohol in all its forms, including alcohol not used for human consumption. In order to manage collection of this revenue, The Federal Government created the Internal Revenue Service. 

Prior to the 1860s, the Federal Government had imposed very high tarrifs on agricultural products that had badly impacted the Southern States since they were primarily agricultural while the Northern States, due to their climate, became more involved in manufacturing and industry. Since the alcohol tarrifs were based on agriculturally derrived products, this was seen as a yet another negative act aimed at the Southern States, despite the sucession movement and the creation of the Confederate States of America. 

The Internal Revenue Act achieved its goal and slowed inflation, but thanks to the high tarrifs on alcohol, it really put a dent in alcohol production. The tax on alcohol in all its forms was $2 per gallon. At the same time, fossil fuels were arriving in the marketplace and offered an affordable alternative to the now-much higher priced alcohol biofuels. Where Alcohol was taxed at $2 per gallon, Kerosene, the still-used pre-curser to Gasoline, was taxed at only 10 cents per gallon. As a result, fossil fuel use flourished in the United States while alcohol use diminished. . 

In Europe, alcohol-based fuels were still being widely used since there were none of the high taxes imposed by the U.S. Federal Government. When the War Between the States concluded, the taxes imposed on Alcohol in the United States remained in place. This forced people in the United States to look to other souces of fuel, namely petroleum-based products. Crude oil was practically oozing out of the ground all over the globe, and companies like Standard Oil were making incredibly cheap gasoline and other products out of it. It began to dominate fuel markets worldwide via Standard Oil's powerful monopoly. Despite it extremely low price to the consumer, it generated insane amounts of profits for its makers.

During the start of motorcycle and automobile sales in the United States, ethanol and gasoline were sold out of general and hardware stores. The fuels were purchased and carried home in cans or buckets, then put into the vehicles. As sales of these vehicles began to escalte, Standard Oil came up with the concept of stand-alone gasoline "stations" where not only could a customer purchase gasoline, but it was placed directly into the vehicle right there by help service attendees. Other items such as lubrication oils and general automotive maintanence service was available that relieved the average car owner form having to  do most service maintanence themselves. This really went far to make the automobile more useable to women of the period. When the gasoline stations began to sprout up accross the United States, that ended any chance of  ethanol being able to compete with petroleum.  

The powerful monopolies that petroluem created alarmed and worried many, especially politicians. Multiple efforts were made to change that in the States.President, Theodor Roosevelt led the charge to free alcohol fuel production from taxation and government control, mainly on the idea to help break up the monopoly  Standard Oil had created. In 1906, the United States finally repealed its tax on alcohol. Despite their efforts, gasoline remained inexpensive, between 18 and 22 cents per gallon, so it remained the preferred choice of the American consumer. Oil companies amassed a staggering amount of money and power. Through that, the petroleum industry dominated the marketplace, despite the cries for the need of other less-pollution creating fuels in the later half of the Twentieth Century.

It is quite clear that Petroleum's dominance will continue through most of the Twenty-First Century. It is now clear that had it not been for the Federal Government's heavy-handed alcohol taxation, we might be in a totally different situation today. I think that  had Alcohol not been taxed as it had, it most likely would have  continued to be a popular fuel and even existed hand-in-hand with Petroleum, if not been more predominately used.