Microbially derived alkanes and their derivatives are recognized as promising alternatives to petroleum-based fuels and chemicals. We review recent developments in their production, assess progress, and their potential against conventional bioethanol fermentation pathways. The success rate of genetic engineering efforts and their commercialization prospects are assessed, as well as challenges for producing fuels and chemicals from lignocellulosic biomass. Although significant progress has been made in the genetic engineering of microbes used in the production of long-chain hydrocarbons and their derivatives, titer and yield of these biomolecules are currently too low to compete with petroleum-derived products. As for microbially derived isoprenoids or fatty acids, the inherent complexity of micro-organism development will continue to present formidable challenges, making it highly unlikely of any short-term commercial take off. Nonetheless, first generation bioethanol (starch/sugar based) production is commercially established and therefore continued advancements in chemical synthesis should enable broad-scale use of bio-ethanol as a chemical feedstock for the production of advanced biofuels including butanol and other long-chain hydrocarbons.