I think given a little time and engineering, you could design an IC engine to run on almost any combustible liquid. Alcohol works great, french fry oil, etc. The problem in my mind is that once any particular energy source becomes widely used, the price will inevitably go up. Nobody wants to use less energy, we all want to use more energy, more cheaply and with less environmental impact. I consider "Flex Fuel," biodeisel, and similar fuels stop-gap remedies with no real future. Eventually, the cost will rise or the environmental impact will be prohibitive. Growing corn, for instance, isn't exactly environmentally friendly. Even wind farms suck if you have to live near them. Hydroelectric screws up the rivers, solar is still a long way out.
A long time ago, my chemistry teacher laid out a simple hydrogen based energy economy. Nuclear power plants produce cheap, clean electric power, at far less risk and with vastly reduced pollution than coal or oil. (I'll argue the nuclear waste versus the coal ash waste disposal or the "safety" of oil versus nuke plants, with anyone who's interested). The nuke plants provide the "static" energy via the power grid. You can run battery cars and bikes that way. For more robust, higher capacity requirements, you use the cheap electricity to make hydrogen. You can burn it, producing water and air for exhaust, or power fuel cells (as on the Space Shuttle) for lots of power in a small package.
After WWII, the predictions were for electricity that would be too cheap to meter. You'd pay a small service fee for the facilities to produce and deliver it. However, free energy means a free society, and takes a lot of money out of too many pockets. But, revolutions have happened before, and I think it won't take too many years of high petroleum prices before we're all open to some new ideas. By the way, using petroleum for fuel is like burning the contents of the Library of Congress to stay warm. Petroleum is vastly more valuable to us in the long run for plastics, medicines, paints, or the other thousands of non-fuel uses. Our kids are going to hate us for blowing it all on fuel.