Fuel Prices Killing Diesel Comeback
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A new study by the Centre of Automotive Research at the college of Gelsenkirchen in Germany found that the diesel share of the German car market has peaked—and will fall from nearly 50 percent today to 30 percent by 2020. The study cites several reasons for the possible decline of diesel in Germany, including improved efficiency of gasoline cars, the falling value of used diesel cars, and the price difference of diesel versus gasoline. Britain’s Automobile Association (AA) reported yesterday that European drivers suffered the highest month-to-month increase in diesel prices this decade. “The price rises in recent days were of a magnitude only exceeded in the aftermath of Hurricane Katrina,” said Edmund King, AA president.
It’s uncertain if European trends will transfer to the United States. But the steeper rise in diesel fuel prices adds to Americans’ persistent negative perception of diesels as dirty, smelly, and loud. Emissions issues have so far kept diesel vehicles from reaching markets in California and other states with stricter tailpipe pollution standards. In addition, diesel does little to displace the use of oil. According to the Department of Energy, each 42-gallon barrel of crude oil yields about 19 gallons of gasoline, and only about 10 gallons of diesel fuel and heating oil combined.
Mike Omotoso, J.D. Power’s powertrain analyst, sees the price gap between gasoline and diesel as a “relatively short-term spike.” In the long-term, the adoption of both diesel vehicles and hybrid cars are subject to fluctuations in the petroleum market—although today’s hybrids are viewed as a bridge technology to plug-in hybrids that require signifantly less oil and electric cars that are petroleum-free.