For many reasons, it would be a good idea to rely less on petroleum and its derivative compounds. Not only are they unfriendly to the environments but they are obviously nonrenewable. Of course, one of the main uses of petroleum is as a transportation fuel, mainly in the form of gasoline.
One promising alternative is biofuel, which if it were made as cheaply as gasoline could effectively replace it. Many biofuel candidates have very similar chemical properties to petroleum-based fuels, with the major difference being that they come from a renewable source. Now this also means that many of them produce carbon dioxide when they are burned. However, the hope would be that the plants and other organisms that the fuel comes from sequester more carbon dioxide than when the fuel is burned.
Another challenge with biofuel is what kind of feedstock the organisms use. Algae is extremely promising because it only requires water, sunlight, and certain trace nutrients. Still on a large scale many are investigating the possibility of other microorganisms, including yeast.
We've covered biofuels from yeast on this website before, and that species converted sugar into lipids. These lipids could take the form of a wide range of compounds including fuels and other chemicals usually derived from plant and animal fats. While extremely useful, it may not be the ultimate solution for replacing transportation fuel.
The main issue with that avenue of development is of course the sugar, which would likely need to be refined from an agricultural source and take up valuable resources. Which is why researchers from the University of East Anglia are working on a way to produce biofuels from agricultural waste; such as sawdust, straw, and corncobs. (via EurekaAlert)
They are also using a kind of yeast, since their ultimate goal is to produce ethanol. Ethanol is not only the kind of alcoholic we drink, but part of many fuel blends. It is also possible for vehicles to run entirely on ethanol. Producing it from agricultural waste eliminates the need to use up agricultural lands, and actually helps the issue.
However it wasn't easy, as much of this waste is made up of cellulose and other compounds that are extremely difficult to digest. Breaking that material down into usable sugars requires extremely acidic conditions and heat, which produce compounds normally toxic to yeast. So the researchers tested 70 natural strains of yeast for tolerance to these toxic compounds.
Eventually they were able to find a strain that is both resistant to these toxic byproducts and extremely efficient at producing ethanol. The hope is that this will open the door to more economically viable ethanol to be used as a biofuel. The researchers did not mention this but an ideal solution would be combining this tolerance with other yeast strains that produce other biological products.