Alternative fuels: Are EVs the undisputed king?

The continuing turmoil in the Middle East has once again showed motorists how vulnerable petrol and diesel prices remain to global events.

With the end of the conflict between Iran and the US remaining elusive as the two sides continue hostilities, and renewed concerns over shipping through the Strait of Hormuz, a route through which roughly a fifth of the world's oil supply passes, crude oil prices have risen sharply, pushing fuel prices higher across the globe. 

For drivers, it is another painful reminder that the cost of filling up often has little to do with events at home.

Every spike in oil prices also reignites a familiar question: if petrol and diesel continue to become more expensive, are alternative fuels finally becoming the smarter financial choice?

The answer is increasingly yes, although not every alternative offers the same advantages.

"Given the high prices of petrol and diesel and their volatility, I think that's really renewing interest in electric vehicles, and whilst EV demand may not be growing as quickly as initially anticipated, it is growing, and high petrol prices will promote that," explains David Bailey, professor of business economics at Birmingham Business School. 

"I think we're also going to see other alternatives as well - we might see more hybrids, for example, the use of LPG in certain markets, like Poland and Italy in particular, where it's well established, and things like ethanol."

The electric charge

Battery electric vehicles have gone from niche products to mainstream transport in little more than a decade, and rising fuel prices only strengthen their appeal.

"In China, where they've been producing electric cars for a very long time and have produced batteries at scale, in some segments of the market, already an electric vehicle is cheaper than a petrol equivalent, and therefore, that's why we're seeing very rapid growth," says professor Bailey.

"That isn't the case yet in Europe, where, because of higher upfront cost and also the lack of real development of the charging infrastructure in some places, the switch to electric vehicles is taking place, but a bit more slowly.

"There's still some work to do to bring down EV prices, for battery prices to come down."

So while EVs generally remain slightly more expensive to buy than comparable petrol or diesel models, they can be significantly cheaper to run.

Charging at home typically costs between a third and a half as much per mile as filling a petrol or diesel car, depending on electricity tariffs, and maintenance costs are lower because electric motors have far fewer moving parts than internal combustion engines.

Unlike petrol and diesel, electricity prices are also less directly exposed to fluctuations in global oil markets.

Although wholesale electricity prices have experienced volatility in recent years, they do not react as immediately or as dramatically to disruptions in oil supply, giving EV owners greater certainty over their running costs.

That does not mean electric cars are without compromises.

"One of the problems is that in some countries like the UK, we have very high electricity prices, 50% higher than in the European Union, for example, so that's actually slowing down the potential shift away from petrol and diesel to EVs," says Bailey.

Furthermore, drivers without access to home charging often face even higher public charging costs, long-distance journeys still require more planning, and the higher purchase price remains a barrier for many households.

Nevertheless, as conventional fuel prices rise, the overall cost of ownership increasingly favours electric vehicles.

Biofuels: the alternative many drivers already use

Not every alternative fuel requires buying a new car.

Millions of motorists already use biofuels without realizing it. Standard UK petrol contains up to 10% bioethanol (E10), while most diesel contains a proportion of biodiesel.

Because these fuels are blended into conventional fuels, they work in existing vehicles and require no changes to refueling infrastructure.

Their biggest advantage is convenience rather than cost. But in some places, where production is sufficient, those blends can turn into full blown alternatives.

"In some countries like Brazil, where they've got big ethanol production, about 75% of new car sales are actually flexible, and they can operate on both petrol and on ethanol," explains Bailey.

But he is unsure whether that could be replicated on a global scale.

"The land that will be used up for producing the ethanol, [which] essentially takes land out of food production. We're also going to see issues around the food security and supply chain, so they're potentially going to be competing."

Since biofuels are sold alongside petrol and diesel, they generally follow the same price trends, including increases driven by global oil markets, meaning they are better viewed as a way of reducing emissions than as a means of lowering motorists' fuel bills.

Their environmental benefits also depend heavily on how the fuel is produced.

The forgotten alternatives

Long before electric vehicles became commonplace, Liquefied Petroleum Gas (LPG) and Compressed Natural Gas (CNG) were promoted as cheaper alternatives to petrol.

LPG can still cost substantially less per liter than petrol, making it attractive for drivers covering high annual mileages.

However, because it contains less energy than petrol, vehicles consume more fuel, reducing some of the savings.

Converted vehicles also sacrifice boot space to accommodate the additional fuel tank.

"It was never really marketed properly in many European countries in particular - it only really succeeded in a big way for new cars in Italy, where they also set up a very good distribution network, and for conversion cars in Poland," explains Bailey.

"I think there are some interesting questions about whether that can be replicated in other markets, like the UK, so that even though ultimately it comes from petrol, it provides greater efficiency and reduces the cost of motoring."

CNG offers similarly low running costs and cleaner combustion, making it particularly attractive to buses, taxis and commercial fleets.

Yet both fuels suffer from the same fundamental problem: infrastructure. As governments have increasingly prioritized investment in electric charging networks, LPG and CNG refuelling stations have become comparatively scarce, limiting their appeal for private motorists.

The recent volatility in global energy markets has also affected natural gas prices, narrowing one of CNG's traditional economic advantages.

Hydrogen's promise remains on the horizon

Hydrogen fuel cell vehicles have often been presented as the best of both worlds, offering driving ranges comparable to petrol cars while taking only a few minutes to refuel.

On paper, the technology is compelling. In practice, however, hydrogen remains prohibitively expensive for most private drivers. 

Vehicles are costly, refueling stations are rare, and producing and transporting hydrogen remains energy intensive.

"I certainly think we'll see it in commercial use: buses, big commercial vehicles," says Bailey.

"We're seeing some experimentation as well with it, and it may well be used in power machinery - JCB here in the UK is trying to transition its diesel engines into using hydrogen, so I think that's also a potential niche."

But like many experts, Bailey remains skeptical about its use in terms of the mass car industry.

"The amount of money going into EV development is pushing down the price of batteries, and therefore, ultimately, that, I think, will be the dominant fuel type."

More than an environmental decision

For many years, the debate surrounding alternative fuels centered almost entirely on climate change and reducing emissions. Today, economics has become just as important. 

Every geopolitical crisis that disrupts oil supplies exposes the financial vulnerability of petrol and diesel vehicles, while electric vehicles remain comparatively insulated from fluctuations in crude oil markets.

That does not make EVs immune to rising energy costs, but it does reduce their dependence on a commodity whose price can change dramatically overnight because of events thousands of miles away.

"If we see continued high and volatile petrol and diesel prices, I think we're going to see a variety of different fuel types around the world," says Bailey. 

"For some consumers, it will promote the shift to EVs. For others, hybrids. There may be experimentation with LPG.

"But in some parts of the world where there's lots of ethanol production, we may see that increasingly part of the mix."

Alternative fuels are therefore no longer simply an environmental choice. Increasingly, they represent different approaches to managing the cost and uncertainty of personal transport.

For now, battery electric vehicles appear to offer the strongest combination of lower running costs, improving infrastructure and technological maturity.

Biofuels continue to reduce emissions without requiring major changes from motorists, while LPG and CNG occupy increasingly specialized niches.

Hydrogen remains a promising technology, but one whose widespread adoption is likely to come first in commercial transport rather than on suburban driveways.

As oil prices continue to respond to instability in the Middle East and elsewhere, one thing is becoming increasingly clear: the case for moving beyond petrol and diesel is no longer driven solely by environmental concerns.

It is increasingly becoming an economic one as well.