The cost of gasoline at the pump, like electricity, has dropped in real terms over the past twenty years. The national average price of unleaded gasoline, for example, was 25% less in 1994 than in 1976.²⁴ Gas prices are beginning to increase, however, as costs of producing cleaner reformulated gasoline are added to the pump price.²⁵ More importantly, perhaps, Americans are much more aware of factors affecting the cost of a gallon of gasoline than of those affecting the cost of a kilowatt hour of electricity. For example, film clips about expensive U.S. military actions in the Middle East frequently appear on television news. Events like these remind people that the true costs of oil dependence in transportation greatly exceed the pump price of gasoline.

On the other hand, the price of hydrogen-based transportation options, although still higher than conventional fuels and technologies, is dropping. Furthermore, the use of hydrogen in fuel cell vehicles offers a key economic advantage over gasoline used in conventional vehicles. In transportation, hydrogen competes head-to-head with gasoline in terms of fuel cost per mile driven. Because electric propulsion systems are between 1.5 and 3.0 times more efficient than internal combustion engine systems, less fuel is needed per mile driven. Therefore, hydrogen can cost more than gasoline, yet still be the cheaper fuel per mile of driving. This leverage factor greatly reduces the economic barrier facing renewable resource use in transportation. In fact, the cost of hydrogen produced today from biomass or wind farms is competitive with the cost of gasoline on a per mile driven basis. Hydrogen produced from natural gas and used in a fuel cell vehicle is considerably cheaper than gasoline per mile driven.

Future gains in gasoline-burning internal combustion engine efficiency may erode this leverage, but renewables currently have a sizable advantage in transportation. In contrast, they are at a disadvantage in centralized electrical generation, where more expensive renewable-based electricity must compete one-to-one, kilowatt-hour for kilowatt-hour, with power generated from cheaper fossil fuels.

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