By the early '30s, the use of alcohol blended with gasoline as a motor fuel was common in many parts of the world. Argentina, Austria, Brazil, France, and Italy all decreed that alcohol be mixed into gasoline supplies to reduce imports of foreign oil or refined gasoline. In Germany, alcohol, produced chiefly from potatoes and also from grains and molasses, was mixed extensively to extend that country's limited petroleum supplies. In the U.S., however, a dark cloud formed on alcohol's horizon. A group of oil companies decided to flex their muscle and oppose the dilution of their profits that they perceived would come from a gasoline and alcohol motor fuel. A 1933 article in The New York Times, titled "Motor Fuel Blend Decried by Oilmen," reported, "The proposal that Congress enact a law requiring that all gasoline sold in the United States as motor fuel be blended with 10 percent by volume of alcohol made from agricultural products grown within the continental United States is opposed by oil companies on the grounds that it would give motorists a fuel inferior to that which is obtained solely from crude oil and that the prices would be higher." Big agriculture wanted into the fuel business and the oil companies wanted to keep it out.

The warfare between big agriculture and big oil came to a head on Apr. 14, 1936, at the meeting of the American Chemical Society in Kansas City. As reported in The New York Times, the oilmen were represented by Dr. Gustav Egloff, director of research of the Universal Oil Products Company of Chicago, and Dr. J.C. Morrell, the company's associate director. Dr. Egloff and Dr. Morrell summarized their arguments: "Alcohol gasoline is a distinctly inferior motor fuel in performance, consumption, and upkeep of the motor. Difficult starting, slow acceleration, overheating of engines, and rougher driving can be expected. Economically, blending can result only in economic loss to society, and additional unestimated losses will result to the country at large from the political, moral, and health hazards." Faced with this argument, Dr. Leo Christensen, from the Farm Chemurgic Council, could only point to a new market for farm products, extra farm income, and the potential for 2 million new jobs as reasons to blend gasoline with alcohol. The oilmen, seemingly without irony, came back with an argument on "moral and political grounds." The New York Times wrote, "Tests show, they assert, that the grain alcohol could easily be extracted from the gasoline mixture and would provide good drinking liquor at automobile bars at a cost of only 5 cents per quart. This, they say, would add considerably to drunken driving and motor accidents."

Dr. Egloff also addressed the supply of oil: "... At the present rate of discovery of new fields, it's practically inexhaustible, and that the hydrogenation of coal would provide a supply of oil for 10,000 years." He concluded with the remark that, "If it were desirable, from a purely technical point of view, to produce alcohol for motor fuel use, the oil industry can make it in enormous volumes, from cracked gases from petroleum refining, at a price highly competitive with any produced from farm products." When Dr. Oscar C. Bridgeman from the National Bureau of Standards supported the position of big oil, old carbon and the oil companies ended up the big winners. The idea of using new carbon ethanol as America's motor fuel was put back onto the shelf where it would more or less stay for the next 60 years.

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