Los Angeles, CA, June 7, 2007 - As Congress, the automakers and delegates to the G8 Summit spar about increasing fuel-economy standards and what other measures to take to insure energy security and curb greenhouse gas (GHG) emissions people around the world are increasingly taking matters into their own hands by buying fuel efficient diesel and hybrid gasoline vehicles. This trend is likely to continue but the new clean burning diesels are poised to outstrip hybrid sales in the US.
According to a report by Ricardo, a strategic consulting firm for the automotive industry, diesels already dominate in Europe, and the conditions may now be right for a big acceleration in diesel sales in the North American market. Ricardo forecasts that combined diesel and hybrid gasoline will represent 15% of the U.S. light vehicle market by 2012, with sales of diesels outstripping gasoline hybrids by 1.5 million units versus 1.2 million.
While hybrid gasoline technology appears to be the preferred route in the United States, modern diesel powered autos can match a hybrid’s fuel economy and deliver several cost advantages.
This hasn’t deterred many automakers plans to launch hybrid products in the next few years, but Ricardo notes that this technology faces substantial manufacturing cost penalties, which are unlikely to be eliminated, even in mass production. The company says that diesel has a clear cost advantage over hybrids, even when factoring in the cost of complex exhaust after-treatment technologies necessary to meet future, more stringent emissions regulations.
Other industry observers, such as the American Automobile Association (AAA) and J.D. Power and Associates agree that the current US total of diesel powered cars (4.8 million) is poised for substantial growth partly as a result of the price advantage of diesel fuel over gasoline which hasn’t been this wide in a decade.
At $3.21, the national average cost for a gallon of gas as of May 25 was up nearly 33% from the same time last year, according to U.S. Energy Information Administration (EIA). The new Ultra Low Sulfur Diesel (ULSD which contains 15 sulfur parts per million or less,) came in at $2.80 a gallon, according to the EIA.
One reason for this price difference is the ongoing pattern for diesel prices being exactly the reverse of gasoline. Since pricing for diesel is dependent on the winter supply and demand of the home-heating oil market, diesel prices usually drop as summer arrives and increase during the fall. Meanwhile, gasoline continues to rise as vacation season begins. Oil companies claim this is partly due to restrained capacity stemming from damage done to their refineries by hurricanes nearly two years ago.
Regardless of the reason, the Washington, D.C.-based Diesel Technology Forum (DTF) says that the 40%-plus pricing differences combined with the 20%-40% fuel-economy efficiencies, inherent with diesel powertrains over gasoline, give consumers compelling reasons to switch to diesel.
Fred Rozell, a retail gasoline/diesel analyst for the Oil Price Information Service-a petroleum industry pricing news and information firm that supplies data to AAA, said, "I think eventually the majority of the U.S. (auto) fleet is going to be running on diesel.” But Rozell recognizes the amount of work it’s going to take to accomplish this shift. "The transition where half the vehicles are running on diesel and half on gasoline is going to be difficult."
For more information: www.dieselforecast.com .
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