The algae grows by consuming CO2 and sunshine, plus water, as do all plants. The product qualifies as a renewable fuel, as do ethanol from crops and bio-diesel.
In the Grand Game (which I described here), oil-alternatives play a crucial role. First, as more oil-alternatives are found or created, there is more competition for traditional petroleum. However, bringing an oil-alternative to market can be difficult, if the cost of production is higher than that of petroleum. Examples of oil-alternatives include tar sands, oil shale, coal-to-liquids plants, ethanol from crops, and bio-diesel. Some would include natural gas-to-liquids plants, an example of which is a natural gas-to-diesel plant.
The costs to produce algae-oil will include land, nutrients, water (this may be from rain), harvesting, and processing plants to yield the oil. There may also be a storage cost, if the algae does not grow well, or at all, during winter months. One can envisage a growing season of six or seven months, so that part of the oil produced is stored up for use during winter months. Or, one can envisage large floating ponds on the ocean near the equator, with the algae growing in specially treated water (not sea water).
Again referring to the Grand Game, one can envisage the great hot deserts of the world, particularly in Northern Africa, using sunshine to desalinate seawater, pumping the fresh water into the desert to irrigate algae ponds, and producing algae-oil for sale to the world. If this comes to pass, it will greatly change the world. Also, the great deserts of the U.S. Southwest can be used to great advantage. This would be a good use of the abundant sunshine, rather than converting the sunshine to electric power via photo-voltaics.