Fuel Prices Killing Diesel Comeback

Some auto industry analysts believe diesel vehicles will become more popular than hybrids in the next decade—but high diesel fuel prices could radically change those forecasts. This week, the average price of a gallon of ultra-low sulfur diesel is a dizzying $4.50 a gallon, compared with gasoline at $3.84.

Despite the fact that diesel vehicles achieve better fuel economy than conventional cars, and are roughly equal to hybrids in efficiency, the premium for diesel fuel—currently 66 cents a gallon compared to regular gasoline—could dissuade new car buyers from adopting diesels.

Higher energy prices affect the cost of diesel differently than gasoline. While supplies of diesel and gasoline are nearly equal, demand for diesel has grown at a faster rate. John Felmy, chief economist of the American Petroleum Institute, an industry trade association, testifying before Congress, said, “Over the past five years, U.S. demand for highway diesel has been rising at triple the rate of gasoline.”

Diesels and gas-electric hybrids each represent about 3 percent of today’s new car market. J.D. Power predicts that diesel will rise to 11.5 percent by 2015, while hybrids will plateau at 7 percent. Mercedes, Volkswagen, Chrysler and other makers of so-called “clean diesel” vehicles, which are expected to arrive in car showrooms later this year, are counting on this forecast to come true. But there’s mounting evidence that diesel adoption, especially in Europe, will remain flat or decline.


  • Need2Change

    The 11.5 percent diesel sales appears realistic as gasoline engines with direct injection and turbos become as expensive as diesels and hybrids cost more. I also believe that diesel fuel usage may decrease as long distance trucking becomes less common. Trains will carry more freight. This may also lessen the price premium for diesel.

    The 7 percent hybrid sales by 2015 is puzzling to me–only one out of 14 vehicles. I would have expected at least 25 percent hybrid sales. By 2015, the price of fuel will be about $10/gallon. At that price, a 50 mpg hybrid will be quite desirable.

  • bwagsbags

    Most articles I read, including this one, ignore the fact that diesel will probably always be more expensive than gasoline since it takes about 15% more petroleum to make it. So with a 30% fuel efficiency increase you’re only saving 15% petroleum and thus probably about 15% carbon emissions and 15% cost.

  • Paul Rivers

    “Most articles I read, including this one, ignore the fact that diesel will probably always be more expensive than gasoline since it takes about 15% more petroleum to make it.”

    I would think that was the case to, but the article does actually mention this – it’s just some idiot decided to break the story up over 2 pages. See the 1 and the 2 at the bottom of the story? Click on the 2 and you’ll get the second page of the article.

    I wish hybridcars.com wouldn’t do this – I bet only 10% of the people who read the article actually realize there’s a second page.

  • domboy

    “Most articles I read, including this one, ignore the fact that diesel will probably always be more expensive than gasoline since it takes about 15% more petroleum to make it.”

    While that may be true, up until last fall diesel fuel was always cheaper than regular unleaded in the summer, and more expensive in the winter.

    What’s sad about this whole thing is that the diesel engine was originally designed to run on vegetable oil, and not this nasty petroleum stuff…

    I’d say with diesel demand rising at triple the rate of gasoline, we are really going to need a cost effective way to produce biodiesel…
    And I really hope the higher price doesn’t cause the new diesels to fail! I know I sure enjoy my VW Golf TDI! Even with diesel more expensive, I still end up better off than if I had the gasoline version of the same car.

  • steved28

    Those of us running oil heat are screwed. I have a 250 gallon tank in the basement. Do the math. The more popular diesel becomes the harder it will be for many to heat their homes. Time to buy that second pellet stove.

  • Gary

    The EPA for the new VW Jetta TDI diesel is just up on http://www.fueleconomy.gov — its not that impressive, and the CO2 footprint is 1.5 times a Prius.

    http://www.fueleconomy.gov/feg/diesel.shtml
    VW TDI 30 mpg city, 41 highway and 6.2 tons of CO2 per year

    Gary

  • JJSpawn

    The numbers on diesel and hybrids don’t seem right or at least in complete. I think bev/phev’s are going to factor somewhere in there by 2015….

    Gas could double (quadruple) digits by then as far we know… So I think the number of straight ice cars will be greatly reduced.

    Diesel can only get that high if a good majority of people driving go back to their roots of cooking oil and such. Then that number could probably be even higher.

  • Jman

    Thanks Paul, I didn’t realize there was a 2nd page till after reading your comment. It really is absolutely stupid to split an article this short into 2 pages.

  • dm

    My stock/unmodified 1999 VW TDI 5-spd averages between 47 to 53 miles per gallon.