Fuel Prices Killing Diesel Comeback

May 21, 2008

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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.

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  • 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.