Algae is a fascinating possibility, but remember that it requires water. The hydrogen in the oil has to come from someplace; that someplace is the water, which is consumed at (very roughly) a one-to-one ratio by mass for the oil produced. In addition, the algae will require some nitrogen, phosphorous, and other nutrients. This makes the desert unattractive unless it is near an ocean and the algae can tolerate salt. Since the algae will extract water and concentrate salt, the oversalted brine will have to be returned to the ocean. In addition, the nitrogen, phosphorous, etc. will have to be kept out of the ocean to the degree possible. If your source of these nutrients is agricultural runoff or municipal wastewater, that has to be taken into account in water disposal, too.
The problems are not insurmountable; if algae can produce fuel economically the market will find ways to solve the other problems.
