Posted By RichC on May 20, 2008
In a Turin, Italy press conference, Volkswagen’s powertrain research director, Wolfgang Steiger, stated that “roughly 30% of VW’s total U.S. sales will likely be derived from its diesel models by 2018.” Compared to its prior 15% percent of vehicles and near monopoly on affordable diesel cars, that percentage will nearly double their sales in ten years. The rollout of their clean diesel technology in late summer is expected to kick off this initiative. (Motortrend)
Click graph for larger image
BUT … unless politics and lobbiest rethink their strategy … only diesel advocates will be considering diesel — just take a look at the pump prices (and its not even fall and winter â€” when fuel oil demand is up). An interesting article in The Independent reported on diesel fuel and the new clean diesel cars that will begin showing up in the U.S. â€¦ just as diesel fuel prices have rise significantly higher than gasoline.
The American Petroleum Institute attributes the fast-climbing price of diesel and its higher-than-gasoline cost to several factors. Diesel is a close relative of home heating oil, and so costs usually rise in the winter. And while demand for regular gasoline is slipping, diesel use has climbed in the U.S. and production is at capacity. What’s more, if gas prices go up consumers can use less, but if diesel fuel goes up the trucks, which right now are the big users of diesel, still have to keep on trucking.
Diesel use doesn’t fall, so demand is not susceptible to price as it is with gasoline. Plus refiners spent $8 billion to reconfigure their plants to produce cleaner, reduced-sulfur diesel. According to the U.S. Department of Energy, refining costs make up 21% of the cost of diesel, whereas refining costs for regular gasoline are only 8% of the total cost. It seems as though refiners are looking to get their investment back and that is driving up the cost.
Then there are the taxes. Percentage-wise they are about the same, 13% on regular and 12% on diesel. The actual difference is 6 cents; the federal government charges 24.4 cents per gallon and regular gas is taxed at 18.4 cents a gallon, 6 cents lower. So our government charges more in tax for engines that give better fuel economy. How’s that for making sense? In Europe, taxes on diesel are lower than gasoline because they want to encourage diesel use and higher fuel economy.
Here’s the question “Will they sell?”
These decisions were all made before diesel prices here soared so far past gasoline and wiped out the potential of cash savings. Europe is different. About half the vehicles sold in Europe are diesel because fuel, both gasoline and diesel, is much more expensive than here. But diesel is a bargain, and its cost is much lower.
Of course bargin is one man’s opinion … since prices of gasoline and diesel at a Texaco station in Brussels reported regular gasoline selling at $9 a gallon (at $1.59 to the Euro) and diesel was $7.81.
See NYTimes “So you think gas costs a lot?” article.