Diesel Fuel Fluctuations Cause Concern for Light-Duty Truck Buyers? Not Yet.
Tim Esterdahl | Jun 06, 2014 | Comments 9
The rising interest in diesel-fueled pickups is great for auto sales, yet what happens when more demand occurs? Supply gets tighter and prices go up. Is this a long-term problem consumers aren’t figuring into their total vehicle ownership costs? You bet.
When crops are harvested this fall, diesel fuel prices will rise. Fluctuations like this are common to diesel fuel, will this cause concern for light-duty truck buyers?
Diesel Fuel Prices Rising
Last winter, diesel cost nearly $1 more than gasoline according to AAA. Just last month, it was 30 cents more than a gallon of regular gasoline, based on a national average. In fact, since September, 2004, diesel fuel prices have risen higher than gasoline.
These increases in diesel fuel prices have been shocking to many. It seems like they raised without any rhyme or reason.
“The price of diesel is a mystery to many people,” said Allen Schaeffer, director of the Diesel Technology Forum as quoted by the Detroit Free Press.
Increased demand and prices seem to be linked to:
- Diesel-powered vehicles are expected to grow from 3% of the U.S. market to 6% to 9% in 2020.
- Nearly 50 percent of the European auto market is diesel powered (and could be growing)
- Developing countries are switching to diesel for construction, mining and heavy duty vehicles.
- Diesel fuel is similar to the heating oil used in Europe and the Northeast. When heating oil supply is low, utilities and businesses switch to diesel.
- Diesel-powered large ships are getting bigger and engine size/fuel needs are increasing.
- Seasonal events like harvesting crops drive up diesel fuel demands.
Also, taxes on diesel and gas are different. The diesel tax is upwards of 6 cents higher on a national level with about one-third of U.S. states applying their own additional tax on the fuel.
Why an additional tax? Diesel has long been the “commercial” operator fuel of choice. Politicians are generally able to increase those taxes without a large backlash. Thus, when given the choice between increasing taxes on diesel or gasoline – diesel wins every time.
It is worth pointing out, before people jump all over politicians, the last increase in federal gas taxes was back in the early 1990s. Back then, diesel was quite a bit cheaper than gasoline.
All of these factors create a situation where the price of a barrel of diesel ranged from $119 to $130 in the last quarter of 2013. Gasoline was as low as $99 a barrel.
More Supply Coming
Tom Kloza, chief oil analysts for Gasbuddy.com, says U.S. oil refineries are investing aggressively to produce more diesel. This is to meet rising global demand AND diesel fuel is more profitable than refining gasoline.
“Diesel is the product refineries want to make,” Kloza told the Detroit Free Press. “It’s more steadily profitable than gasoline.”
The profitably is due to diesel not being as refined as gasoline. In other words, it is cheaper to make diesel and it sells for more than gasoline. It is no surprise that diesel is becoming more popular than gasoline for refineries.
Bank of America is buying into this trend and they predict is will be consistently more profitable for refiners for the foreseeable future.
Diesel-Powered Truck Still a Good Idea?
The fluctuations in fuel prices haven’t slowed down demand for diesel as of yet. In the coming years, it is expected there will be 40 new vehicles offered with a diesel engine (different trim levels count).
While Ram hasn’t put out numbers showing exactly how many EcoDiesels they are selling, you could draw conclusions from their monthly sales numbers. Most of the manufactures are running between 1-3k more units sold. Ram is running about double that.
Toyota has been really hush-hush on future diesel plans and, one does wonder, if they are worried about consumer backlash to fluctuating diesel prices hurting demand. This is a piece of the diesel-engine puzzle that no automaker can control. Diesel sounds great until you go to the pump during a high demand period when price differences are $1+.
The reality is people are really excited about diesel right now. What happens in September or November when crops are harvested and the cold weather moves in? Will they still be driving their diesel truck the same amount of miles?
What do you think? Are diesel price fluctuations a big concern?
Filed Under: Auto News
Diesel-Powered Truck Still a Good Idea?
Yes, if and only if you have the need for pulling heavy loads more then once and a while. The may get better mileage but, the up front cost, the 15-20 percent additional fuel cost eats that right up and the advantage is gone. 3 gallons of oil, 5 gallons of coolant, just to name a few items. The complex exhaust system needed to control emission will be very expensive when it rusts out.
They redline at about 3000 RPM so they don’t get up and go like a gas motor and if you put the hammer down and run the turbo, they will drink fuel just like any gas motor.
Here in the USA there is no diesel advantage.
I own a 2006 with a cummins 5.9 and would not consider anything newer then 2007 because of the exhaust system changes which will be costly to replace one day.
The new Ram 1500 VM 3.0L diesel is a double overhead cam chain driven engine. Any V design engine is likely going to be chain driven cam. One long, long chain to drive both cams with each side having another chain for the second cam shaft on each side. Total of 3 chains and 4 cams. The inline 5.9 all the way to the 12 liter are a much simpler design. The in-line motors are gear driven and don’t brake. 4 valves per cylinder with only 1 cam, gear driven. From what I read the Italian 3.0L V6 has a good history, but in the long run I doubt there will be any cost advantage over gas.
Someone take the plunge and help us find out.
I agree completely with Larry’s comments, particularly about staying away from the newer models.
I have a 2006 Sprinter with the M-B in-line 5 cylinder diesel. It averages 22+ mpg in an 8000# van. The newer models are nowhere near as good on either mileage or reliability.
The fuel cost is only a part of the long term cost of diesel. Another item is fuel rail pressure of up to 25000 PSI to get them to burn clean. The pump is 2000 and each injector is 250.
So, for me the fuel cost is only about 1/3 of what needs to be considered.
With all the modifications required by the Feds to make diesel as clean as they want it to be and the cost of repairs, I doubt there is a cost advantage in 250,000 miles. Then you are stuck with a car/truck which will not accelerate when you want to pass on the highway. They are designed to pull not race around town.
I often see 18 MPG driving to town and then back home but, I really have to work at keeping the RPM down, stay in 6th gear as much as possible and keep a super light touch on the throttle. Just drive it around without paying attention and it drops to 15. On a highway trip at 60 MPH is will deliver 22. Push up to 75 and it will drop the 18. Still not bad but not when you consider the engine was a 7000 dollar option with the fuel costing 4.00 a gallon.
We can’t pull freight with gas motors and we can’t race with diesel. They are just not the same and the fuel price is only a small part of the equation.
yah, diesel fluctuation in price is a concern it does seem to be more up and down than gas and gas fluctuations are bad enough up one day 10 cents then ONLY back down 3 cents the next day.
Maybe though in the future as more and more cars and 1/2 ton trucks will run on diesel, the market will produce more thus lowering the price and become more steady in price?
I’ve been looking at that new dodge ram 1/2 ton with the ecodiesel and is about a 2900 option is all which isn’t bad vs. other larger diesel engines. I didn’t check out the rebates though on the diesel dodge vs. gas dodge that may differ. Reviews state the diesel dodge pickup is achieving 28 hwy. mpg pushing even 30 at times and 20-22 in town driving. That is about near 10 more mpg or about a 30% improvement in mpg which IS A LOT and will help compensate for the increased diesel costs ONLY IF YOU KEEP THE DIESEL FOR THE LONG HAUL.
This spring I towed about 5000 lbs to Moab UT over a couple mountain passes. A buddy took his new F-250 towing about 6000 lbs. I think he got 3-4 MPG’s better than I did for the trip, max. Therefore I figured with his gas cost his diesel was no better on the 1000 mile trip that my gas powered Tundra.
Diesel is such a funny thing. You start doing the math and it doesn’t always make sense. Yet, there are those who swear by them and don’t mind the increased costs. I can certainly see the need for it at times, but I think the country is a bit diesel crazy right now.
-Tim
Agreed, everybody shouting for diesels in the Tundra and Tacoma and quite frankly I just don’t get it. Very hard to make up for fuel and maintenance costs.
Unless you tow a 35 ft gooseneck you probably don’t need a diesel.
I talked to a guy at the pump with his old 7.3L dodge diesel 3/4 ton. He said he modded it as well but delivers 30 hwy mpg which I found hard to believe. If the truth, that is a heck of a lot better than 17/18 tops hwy. on the tundra gas V8.
worth considering diesel at 30 hwy mpg vs. 17/18???? even with increased diesel fuel costs?
A 7.3 liter diesel in a 7000 ton 3/4 ton, getting 30 MPG? If the guy is a financial planner don’t invest money with him. You couldn’t get 30 MPG with that truck going down hill with a tail wind. I don’t even know of any dodge 7.3. The Cummins 6 cylinder was 5.9 for years and moved up to 6.7 in 2006. The F250 was around 7 but, it still won’t see 25 let alone 30.
Best I see with a 5.9L is 22.5 at 60 MPH and I consider that great. At 70 it drops down to 20.