the internal combustion engine is not widely used in Shashnia because it is so inefficient. There do exist steam engines, and wood-burning varieties, but those that use oil or natural gas exist only as prototypes. International Shashnanii law prohibits using the oil resource in a wasteful or polluting way; not until a prototype is developed that uses the resource to it's full capacity will it be allowed to be used.

currently the most advanced progress in this research is a combination of combustion and magical liberation of the spirits of the past whose bodies decomposed to create the oil. Mind you, it involves some complicated spells and conditions in order to project so far back in time to create a magical output in the present. And the contraption and spell-casting requirements are mountainous, literally.

Combustion engines burning alcohol and biofuel traded from the Termita do exist 

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mechanical demon thingy

to the fright of the onlookers, he plunged his hand deep into the

spinning of the motor.  no blood poured forth, only a stream of oil

and steam.  The engine seemed to rip itself apart, then wrapped itself

around his arm.  What seconds before had been an independent machine,

was now another component in the body of the dark figure.

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Relevant Links

Shashnanii and Human Technology Comparison