Diesel Prices May Force Automakers to Rethink Priorities

After a record-setting summer, gas prices have come crashing back to earth thanks to the recession. Diesel prices, however, remain high, and that may give automakers pause when deciding whether or not to introduce diesel models to the U.S.

According to AAA's Fuel Gauge Report, gas has hit a national average of $1.66 per gallon. While diesel prices have fallen, they remain nearly a dollar higher, at an average of $2.59 per gallon.

This disparity negates diesel's efficiency advantage (diesel is about 30% more efficient than gasoline) and has automakers like Honda rethinking planned pushes to introduce diesel cars. Honda was planning to roll out a four-cylinder diesel under its Acura brand, then move to diesel SUVs. Now it’s re-evaluating those plans. Diesel vehicles also typically cost about $1,500 more than gas-powered ones.

Nissan maintains it will sell its diesel V-6 Maxima sedan by 2010, and Mercedes and Volkswagen have already launched their Bluetec line and Jetta TDI, respectively.

Honda Rethinks Diesels for U.S. (Detroit Free Press)

Comments

Does anyone have any insight as to why Diesel prices haven't dropped like gas prices have? Is it simply because the demand hasn't dropped for Diesel, as trucks still have to make deliveries etc?

On a related but slightly off topic note, is anyone else riled up by airlines, who introduced higher prices, charging for bags etc as a result of high fuel prices, yet have not taken those charges away now that fuel is so cheap again? It looks like simple price gouging to me. What happen when prices go up again? They'll just find new ways to charge us even more??

Mart,
I think the prices for air travel overall have dropped but not the baggage fees. I'm guessing it is expensive to change the operations but it sure would be good will to spread to people put off by the economy.

Congressman Dennis Kucinich (D-OH), who has been a vocal proponent for aid for domestic automakers, today made the following speech during debate on H.R. 7321, the Auto Industry Financing and Restructuring Act:

“I rise in support of the rule and the underlying bill. The underlying proposition is this: Should the United States have an auto manufacturing industry? That is really what we’re deciding here. Because if this rule and/or bill goes down, we are faced with an untenable condition which will lead to the collapse of our automotive making capacity and, according to some economic policy analysts, the elimination of over 3.3 million jobs across the economy; jobs that are affected directly and indirectly by the automotive industry.

“I think it is important to step back and look at the context of this. Are we intending to stay a great nation, a world power, or are suddenly we retreating from the world stage? Because an America without an automobile industry is also going to be an America without a steel industry. We are already seeing our aerospace and our shipping industry affected.

“It is time for us to have a national economic policy, which says that the maintenance of automotive, aerospace, steel and shipping is vital to our national security. Not just our economy, but our security. Sixty-seven years ago, when the U.S. was attacked it was those industries which enabled us to be able to defend ourselves. Now I am a person who stands for peace, but I also believe in preparedness. To me it is unthinkable that the U.S., which was able to mobilize its productive capacity, would suddenly throw it away.

“We have to remember that our ability to make things is vital to being a great nation, and we have to remember that this is a moment that we should be able to rise to this occasion. It is a tragedy that we have to debate something that is a proposition about whether or not we remain a strong nation. You know we’re actually talking only about 2% of the amount of money that was given for the Wall Street bailout, which I spoke against and voted against. This is an altogether different proposition. We cannot totally reject industrial capitalism and remain a great nation. There are a lot of questions about finance capitalism which the $700 billion bailout brought out, but we have to have the ability to make things. And we can’t ask the autoworkers to work for nothing.

“We have to have the ability to make things. We also have to have the ability to see automotive in the scheme of a broader industrial policy. Let’s remember who we are as a nation. With all of our troubles, trials and tribulations, this is still the greatest nation in the world. What keeps us there? Our ability to make things. To make cars, to make steel, to make planes, to create ships- that’s what help makes America great. Let’s not give that up. Let’s not let this moment pass and decide this is just a trivial matter of just $14-15 billion. This is a question of who we are as a nation. Let’s be strong. Let’s vote for this bill.”

Dave,

I'm not sure flight prices HAVE come down. I was just looking at flights to London for New year and they were $1900 for 2 of us, whereas 2 years ago it was less than half that. Instead I'm flying to Mexico and even that is more than what it used to cost me to fly to London.

Anyway, I'm getting off-topic...apologies.

Diesel fuel is expensive because of the demand from our truckers who need and deserve the fuel to do their jobs. Congress should pass a law outlawing the use of diesel technology in cars, unless it utilizes locally produced biodiesel fuel. Putting more diesel cars on US roads would only push diesel prices higher, increasing the whining. With the growing number of clean burning gasoline electric hybrids, there's no need for diesel cars. The market will put diesel cars where they always have been - in the column marked "discontinued."

I think your right on target with this post. I think that several auto makers are going to be producing more diesel options on your every day cars. Ford is to launch a F150 Diesel within the next year or so.

I always have the thought that since we have gasoline electric hybrids and diesels. Why can't we make diesel electric hybrids? With the 30% better efficiency in diesel engines combine with the electric motor efficiency we can get some high mileage cars going.

CC, there are rumors of a VW diesel electric hybrid, but I doubt it will be built. Diesel engines are harder to start than gasoline engines, a disadvantage in a hybrid where the piston engine stops and starts constantly. Smoke and soot would be increased with all the stopping and starting - you'd need a heckuva particulate filter. Diesel's higher compression ratios would cause more traumatic stops and starts with noticeable shudders. The diesel motor weighs more than a gasoline powerplant, and extra weight is a killer in a hybrid car where you also have to haul around batteries and electric motors. Diesel hybrid drivetrains work great in trains, where the diesel engine runs constantly and spins a generator that powers the electric motor that actually drives the wheels. It will take some engineering prowess to make a diesel hybrid car as seamless as the Prius.

Hybrit:

Your comment "Congress should pass a law outlawing the use of diesel technology in cars, unless it utilizes locally produced biodiesel fuel." is very extreme.

In europe, about 40 to 50% of cars sold are diesel. From a refining perpsective, diesel is cheaper to produce, takes less refining then gasoline. The costs are high, due to less prduct produced. If more diesel cars and trucks are produced in the U.S., more diesel will be availabe and ultimately cheaper to produce then gasoline and long term less per gallon of gasoline.

"Diesel engines are harder to start than gasoline engines, a disadvantage in a hybrid where the piston engine stops and starts constantly. Smoke and soot would be increased with all the stopping and starting - you'd need a heckuva particulate filter. Diesel's higher compression ratios would cause more traumatic stops and starts with noticeable shudders." Hybrit

This is not true. I have a modern diesel. It starts easily with no waiting for a glow plug which was necessary in the old days. There is excellent pickup when entering traffic or passing. There is no visible exhaust or smoky exhaust as there was in the old days. While it is not as quiet as a Lexus, it is quieter than many gasoline engined cars I ride. There is no shuddering, and starts and stops are smooth. Fuel economy is considerably better than my gasoline engined cars, and I have been able to drive as much as 700 miles between refueling stops with a standard sized tank. In the 70s and 80s diesel fuel was considerable cheaper than regular gas. It is now considerably more expensive than premium gas. I don't believe the balance between diesel trucks and passenger autos has changed that much. That leads me to the conclusion mentioned above that the producers and sellers of diesel are charging the higher prices because they can. My solution is to buy stock in the oil companies or in oil ETFs as a hedge or offset. It is not perfect, but it helps.

Sorry Roland,
Facts are facts. Compression ignition engines are harder to start than gasoline engines, especially in cold weather. Diesel engines emit smoke and soot during start up, and in a hybrid vehicle that would happen multiple times per minute in city driving. I have to laugh at comments about diesel's supposed fuel economy advantage - the fuel is currently 100 percent more expensive than gasoline. JP's comments about "if you build diesels the price of the fuel will go down" flies in the face of market economics - more demand will push prices up. I don't really care about what they do in Europe with their hefty tax incentives to force people into clattering stinkmobiles. I sincerely hope Congress finds the wisdom to keep the scourge of diesel cars off American highways.

what a fool

The only reason diesel is still so expensive is because the industry is able to manipulate the price of oil however they want. They brought the price of oil down in response to the quick building buzz about alt energy. Diesel has always cost more, since people buy less of it to travel the same distance. It is not because it is more expensive to refine. It is because the oil industry doesn't want companies building more diesel (aka more fuel efficient) cars.
I agree with JM and JP. With the new clean diesel technology of VW, BMW, MB, etc., car companies would be wise to follow in the steps of the Germans. I would rather have an Audi A3 clean diesel over a pretend car like a Prius any day. (no offense to you hybrid fans. I actually like the Hybrid Altima)
"It will take some engineering prowess to make a diesel hybrid car as seemless as the Prius" Perhaps Mr. Hybrit should watch Top Gear's review of the BMW 5-series diesel. I think clean diesel has more immediate potential than hybrid technology to reduce oil consumption and greenhouse gas emissions. The only lasting legacy I see Hybrids as having is if they lead to the development of better electrical engines that one day won't need a gasoline engine under the same hood.

Since you brought up the Prius, consider that Toyota has sold more than 1 million of them and people are waiting in line for them. Honda expects to sell hundreds of thousands of the new Insight Hybrid coming out next year. No one is waiting in line for diesel cars, and every diesel car ever marketed in the U.S. was pulled off the market because people recognized it's a backward technology and refused to support it. Now Acura will pull its diesel cars before they even hit the market.

there are plenty of different ways to get great gas mileage without the use of hybrid technology, and diesel is one of them. diesel is more practical in larger vehicles like full size SUV's. the hybrid Tahoe gets a respectable 20 mpg overall. thats pretty good for a full sized, body-on-frame SUV. that said, the GL320 Bluetec/CDI gets a much better 23 mpg, according to tests by Edmunds.com.

The addition of more forward drive gears to the transmission is also a great way to improve efficiency. a 6 speed automatic gets significantly better gas mileage than a 4 speed, and returns better performance from the engine. that said, an 8 speed transmission gets even better mileage. in Consumer Report's testings, the ES350 with the six speed auto and V6 engine got the same gas mileage as the LS450 with its eight speed and V8 engine. both received a rating of 21 mpg. Adding more gears helps ANY engine, hybrid, gasoline, or diesel.

Direct injection also improves gas milage while still improving performance in any engine.

responsible turbocharging also works in this manner. VW has tuned their turbo's in the Passat, A3, GTI, GLI, Eos, Tiguan and most recently the A4 to get great gas mileage while still proving good performance when compared to other competing four cylinders, usually of more displacement and lesser power. turbocharging can lead to excessive fuel consumption, such as in the STI and Evo, but VW has found the sweet spot.

See this is what really bugs me about hybrid owners. to them, hybrids are the way, and there is no other way beyond that. At least diesel owners and advocates can admit that hybrid vehicles do have some place in the market and do have some virtues to them. but since a Jetta TDI can get the same fuel economy as their Prius or Civic Hybrid but still outrun them from a stoplight, hybrid owners spit at diesel owners. personally, i cannot wait for the A1 TDI hybrid to hit the market. its going to get close to 60 mpg, far more than the Prius' 44, and still be significantly quicker and more fun to drive. Hybrit, sometimes i wonder where you pull this garbage from. Sure, the VW Touareg 2 V10 TDI didnt sell well, but it was $68,000. no vehicle that is $68,000 will make the best sellers list at the end of the month. what has been selling though, is the 2009 Jetta TDI. so far, VW has sold most of them that are available. in addition, until the '09 came out and all of the '06 owners traded their TDI's in, it was nearly impossible to find a Jetta TDI. there still is no easy way to find a Passat TDI from the previous generation. The Mercedes E320 BLUETEC is also selling fairly well, and the ML320 CDI did also before it went on a hiatus. yet, the used car listings on this site are littered with Toyota Priuses and the occasional Camry Hybrid and Civic Hybrid.

There is another thing that always ceases to amaze me about your left-wing, fact-devoid comments: you always fail to address the fact that the batteries found in hybrids are very detrimental for the environment. at 100,000 miles, they will need to be replaced, fact. at that point, diesel engines are still in their prime.

The working men and women who drive trucks and haul our nation's goods shouldn't be competing with diesel car owners for what is now a very expensive fuel. As I mentioned above, I support diesel cars if they burn locally produced biodiesel fuel. I don't support vehicles that create a hardship for truckers, raising the price of everything we consume. Hybrids aren't perfect but they do reduce our nation's dependence on foreign oil, and the plug-in hybrids on the way will use locally produced electricity that will cost about 2 cents a mile when the vehicle is running in the all electric mode.

The working men and women who drive trucks and haul our nation's goods shouldn't be competing with diesel car owners for what is now a very expensive fuel. As I mentioned above, I support diesel cars if they burn locally produced biodiesel fuel. I don't support vehicles that create a hardship for truckers, raising the price of everything we consume. Hybrids aren't perfect but they do reduce our nation's dependence on foreign oil, and the plug-in hybrids on the way will use locally produced electricity that will cost about 2 cents a mile when the vehicle is running in the all electric mode.

VW had strongly hinted at producing a diesel hybrid. Then they said, "Wait a minute," looked at the numbers, and said, "Never mind."

The problem is that you pay a premium for a hybrid compared to the cost of regular gas car. That makes sense - a hybrid is a lot more stuff. You also pay a premium for a diesel over a gas car - a diesel requires tighter manufacturing tolerances, etc. Therefore, a diesel hybrid would be a double premium, and that VW figured they could not sell, partly because consumers would (correctly?) figure that the fuel savings would not pay back for the double premium.

I have nothing against hybrids, I just don't think they have as much immediate potential as the clean diesels are. I don't see how one can honestly say diesel is backwards technology. Apparently the majority of auto publications don't agree with you. The reason people line up for hybrids and not clean diesels is due to the lack of discerning taste in the general
American public, who are easily swayed by marketing trends. Hybrids aren't necessarily a better option, they are just marketed better.

I think the favor of hybrids is that they don't require different fuel. Diesel is still harder to find than regular gas. That puts some people off. plus the price to buy a new diesel is almost as high as similar hybrids.

There's a report out today that Honda is cancelling its plans to offer any diesel cars in the US.

This is quite confusing because some of the people says that this is not so true.