CORN NOT ONLY VEGGIE FUEL AT CARS' SALAD BAR.

Byline: SUE DOYLE

Staff Writer

OJAI VALLEY -- A diesel mechanic for years, Joel Woolf was preparing a speech about his job when he brushed up on the history of diesel engines and learned they ran on peanut oil when first introduced at the 1900 World's Fair.

Intrigued, Woolf started testing vegetable oil as fuel with engines in his own backyard. He and his wife, Rebecca, were astounded when they discovered that the liquid easily worked as an alternative to diesel fuel.

"It was an awakening. It gave me options," said Rebecca Woolf, who with her husband now runs Veg Powered Systems, which converts diesel engines to run on recycled vegetable oil.

"It's about not waiting for big companies or government to hand us answers. It's about individuals seeking answers."

Whether corn, soy, vegetable oil or animal fats, alternative fuels are emerging as small but competitive rivals to traditional gasoline.

And they're also growing in popularity among consumers as oil prices have fluctuated for months. In recent days, for example, oil prices have set several new records over $80, sending gasoline prices zipping upward again toward $3 a gallon.

Standing strong on principle, these grass-roots alternative-fuel businesses are gaining a sort of "flower power" appeal in the field of new fuel sources. But it remains to be seen whether any will ever fully triumph over the rich and powerful oil industry -- either with investments or emerging as major market players.

"When these companies start to be bought up, then we'll know they've arrived," said Bob Stern, president of the nonpartisan Center for Governmental Studies in Los Angeles. He predicts that petroleum companies will continue to monitor alternative-fuel businesses to keep up with the emerging technologies and potentially snap up any promising ones.

"The hope is they would invest in them," he said. "But the fear is that they would fold them."

For now, with many motorists weary of high gas prices, some have begun bucking the mainstream and trying alternatives -- everything from hybrids to experimental fuels made from cashew nuts, sunflower seeds or algae.

"We are in a transition. We don't know where we're going to go," said Jack Kyser, chief economist for the Los Angeles County Economic Development Corp. "We're not there yet. We haven't found the answer."

Politics get in way

The quandary remains, even more than three decades after the energy crisis in the 1970s pushed scientists to find new fuel sources to reduce the country's dependence on foreign oil.

While there has been little room for such alternatives to seriously evolve in a country so heavily reliant on oil, in recent years the oil industry has felt growing pressure as its refineries age.

The 143 major U.S. refineries can handle a collective 17 million barrels of crude oil a day, but not a single major U.S. refinery has been built since 1976, and there are no plans for any -- largely because of public opposition and the $3 billion start-up cost.

To compensate, oil companies are bolstering their existing refineries, said Ray Connolly, a spokesman for the American Petroleum Institute.

"The industry has expanded refinery capacity at existing refineries, and that has reduced the need to build more," he said. "It's not as if nothing's happening."

But public officials are slowly making some room for alternative fuels. President George W. Bush has set a goal of replacing 15 percent of domestic gasoline with biofuels -- ethanol and biodiesel -- during the next decade.

Congress is considering measures to increase alternative fuel production to 36 billion gallons annually -- up from less than 6billion gallons now.

And in January, Gov. Arnold Schwarzenegger signed a law to reduce carbon by at least 10percent in transportation fuels by 2020. He's also pushing to develop a hydrogen-fueling infrastructure in the state that would support hydrogen fuel-cell cars.

The calls for alternative fuels have kicked off lobbying wars among industries vying for a shot to dominate an emerging market. But so far, larger, wealthier groups are leading the way in an increasingly politicized landscape.

"The whole debate over alternative energy has been so skewed by special interests that people are not fully informed of what's economically feasible," said George Huang, an economist for the Los Angeles County Economic Development Corp.

Midwestern farmers, for example, say ethanol can save the day. But with one acre of corn producing just 18 gallons of gasoline, it would take tons of corn to feed America's demand for fuel. Still, politicians looking for votes from the middle of the country defend ethanol and are fighting to keep corn heavily involved in the national conversation about alternative fuels.

"We're so focused on corn, and it's such a bad source that it's displacing a lot of money we could devote to other alternative fuels," Huang said.

The Woolfs have learned this the hard way since 2003. Diesel-electric cars that run on vegetable oil could be the wave of the future, they said. But they are dismayed as their voice gets overrun by others with more political clout.

"Right now, it's whoever has the most money. That's the technology that gets out there," Rebecca Woolf said.

But despite the problems, alternative fuels are gradually gaining ground with consumers and some businesses. More than 75 million gallons of biodiesel -- a fuel produced from oil or fats -- was sold in 2005, up from just 500,000 gallons in 1999, according to the National Biodiesel Board.

About 400 major U.S. fleets are filling up with biodiesel, and more than 500 retail filling stations are offering it to the general public.

Biodiesel catches on

To spread the word about biodiesel, Colette Brooks of Malibu set up a trailer in Marina del Rey to serve as a filling station for customers who bought diesel cars from her Earth-friendly car-finder service, Biobling. Brooks hoped it would show local gasoline businesses the profitable market for biodiesel. And it worked.

Within 20 days, a gas station in Pacific Palisades began selling it. Then another in Marina del Rey. Then one in Brentwood. So Brooks moved her trailer to Echo Park and hopes to spread the word there before coming to Hollywood and the San Fernando Valley.

"This is by the people, for the people," said Brooks, who considers even her hybrid a gas-guzzler. "I would wish nothing more than oil and gas people come to the party."

Annalloyd Thomason, executive director of the Alternative Fuel Vehicle Institute, shares a similar dream and wants to see big companies buy out and invest in the alternative-fuels industry.

For years, the Las Vegas-based institute has specialized in market development and use of alternative fuels such as compressed natural gas for fleets.

More than 130,000 vehicles on U.S. roads use compressed natural gas -- including buses in the Los Angeles Metro fleet -- and nationwide there are about 767 compressed-natural-gas stations.

Thomason said the alternative- fuel market is modest but growing, as global oil supplies get tighter and greenhouse-gas emissions remain part of a global debate. She said large companies are keeping an eye on alternative- fuel businesses and will not get involved until there's a sustainable and profitable market.

"I'm waiting for the day we get bought out by the big companies. I guess that's the way of capitalism," Thomason said. "They'll come in after we've done all the heavy lifting."

sue.doyle(at)dailynews.com

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Photo:

(color) Colette Brooks fills up her car at a biodiesel filling station at a trailer set up in Echo Park.

John McCoy/Staff Photographer