Will Diesel fuel always be more expensive than Petrol?

[mastereng]

In January this year I bought an A Class A180 CDI. I did a "back to back" test drive comparison with the A150 petrol and thought it overall marginally better, particularly on the motorway. I thought the increased list price of the diesel would to some extent be recouped by better mpg, lower road tax (CO2) and better residuals.

Now, however we have the ever widening gap in price between diesel fuel and petrol so my mpg gains are being offset by the lower price of petrol. In my memory, diesel has always been about the same price or slightly less than petrol but this year apart from huge leaps in (all) fuel costs we see this differential between diesel and petrol.

Will this price gap continue for the forseeable future? Will it get even bigger?

And maybe the petrol A Class might in retrospect have been the wiser choice?

Any thoughts and comments on this appreciated.

 

[dava]

I think you should never discount a petrol car on the price of petrol only. Petrol cars can be just as economical and some times more refined in the way they run, also they tend to cost less to buy. For me the reason deisel has risen is because it is more popular, look what happened to LPG and for that matter cooking oil. The anoying thing is all delivery trucks use deisel and this pushes the price of the family shop up, just accept we are shafted!

 

[Blobcat]

The only reason that Diesel is more expensive is that in the 90's many company car drivers switched to Diesel as it was cheaper than Petrol and Diesel engines had come on so much that they were a viable alternative. The Government realised they were losing valuable revenue therefore they increased the tax on Diesel making it more expensive than Petrol. It was on the back of Diesel Particles that they raised the tax however just about all Diesels have particular filters now and produce much less CO2 which was the big evil previously. If most people switch back to Petrol then Diesel will become cheaper again.

 

[grpar]

The only reason that Diesel is more expensive is that in the 90's many company car drivers switched to Diesel as it was cheaper than Petrol and Diesel engines had come on so much that they were a viable alternative. The Government realised they were losing valuable revenue therefore they increased the tax on Diesel making it more expensive than Petrol. It was on the back of Diesel Particles that they raised the tax however just about all Diesels have particular filters now and produce much less CO2 which was the big evil previously. If most people switch back to Petrol then Diesel will become cheaper again.

But as diesel is an industrial fuel (more than petrol), surely the increase in global consumption of diesel (China, India, etc) will now tend to keep long-term prices higher than previously.

 

[djb]

there is only one reason diesel is more expensive in theUK

Grabber Gordon

diesel still costs less than 45 ppl to find, extract,ship,refine,transport,retail & profit f or all. the rest is tax !!!!!!

elsewhere in europe D is cheaper than petrol.

 

[Blobcat]

But as diesel is an industrial fuel (more than petrol), surely the increase in global consumption of diesel (China, India, etc) will now tend to keep long-term prices higher than previously.

I agree they will be higher than previously, there is no reason why they should be higher than Petrol though other than additional tax.

I invested £103.54 in Diesel this morning

 

[mastereng]

Well, thanks to everyone for your comments. I understand the tax implication on all of this too. I agree with Blobcat and djb and in particular on the European situation. The continental countries partcularly France have long viewed (correctly in my opinion) that a diesel engine is a more efficient user of fuel than a petrol engine so they have encouraged people to buy diesel cars through their taxation policy. As most freight goes by road and is effectively 100% diesel powered it makes sense from that point too.

Over here, of course it is all about raising tax revenue. Petrol is a more highly refined product than diesel so cost of manufacture should be higher. I read somewhere that the oil companies invested heavily in the unleaded fuel production/distribution and now the UK has moved more towards diesel there is probably on a local UK basis more unleaded production capacity in relation to demand than there is for diesel so this might be influencing things.

Final comment. Gordon Brown and Co try to get so much bad news through with "environmental" justification - such as high fuel tax, retro high car tax etc. Yet he jumps on a plane and persuades the OPEC countries to pump more oil (did the same in Scotland recently) which if he is successful will mean more fuel burnt by somebody and more CO2. So much for the Green PM!

 

[grpar]

As a motorway regular, it is clear in recent weeks that there are less cars on the motorways, and that everyone is driving noticeably slower. No question about it.

So, what is it that you actually want to acheive here ? Is it substantially lower duties, resulting in urban/metropolitan roads filling up to congestion again (even leaving aside the emissions that would result) ?

Or is it just a small reduction in duty to match your continental counterparts ?

If the answer is the latter, remember that most european countries have substantial purchase taxes on cars (diesel especially) as a one-off tax hit. Ask a dutchman or a belgian, for example.

Darling et al have proposed a broadly similar concept through the "showroom" tax, coupled with higher duties across the board. The result ? Everyone's up in arms about it.

I pity the politicians, as there are no solutions that anyone is prepared to compromise on. It's the sort of single-issue campaigning that has now (unfortunately) become the norm in British politics.

 

[Xtractorfan]

The official reason for diesel being more expensive is that there is less diesel produced, than petrol...and that the current trend towards people buying more diesel cars and the world demand for diesel is outstripping supplies therefore any commodity that is in big demand carries a premium..no doubt when all is done and dusted and the enquiries begin we will see that many of the big banks and financial institutions who have lost billions in the USA sub prime fiasco will have been in there filling their coffers and inflating the price of oil and if gordon the goofer doesnt see that then he is definately out of touch

 

[oigle]

I can't claim authorship of the following - this is an edited extract from a "Wheels" car mag in Oz and, in my opinion, sums up the problem well.

"The spike in diesel price merely reflects global supply and demand. It's basic economics. The burgeoning economies of Asia are driving the global demand for diesel to unprecedented levels. Supply of crude oil is, for practical purposes, fixed. Crude oil production capacity is maxxed out globally - the process can't be driven any harder. That's what "peak oil" is. It is also worth remembering that diesel, like jet fuel and kerosene, is a 'middle distillate' - lighter than bitumen, heavier than petrol. These three different liquids, underlined above, are basically produced from the same 'fraction' of crude. Therefore, increasing the supply of jet fuel decreases the supply of diesel that can be produced. This is simply because at the refinery, one can't have one's crude cake and eat it too. And at the moment demand for jet fuel is sky-high globally, as you see reflected in airline ticket prices. In an environment of fixed supply and increased demand, diesel prices can only go one way - up!! This is a trend that will be impossible to reverse in the foreseeable future. So, medium term anyway, the split between petrol and diesel prices at the pump is set to widen further and you will probably notice a subtle shift in car company advertising, too. It is a safe bet that we'll see car companies marketing their diesel offerings more on the basis of their purported green credentials rather than on any long term hip pocket savings"

Thought the above was rather good.

 

[grpar]

I agree, Oigle.

 

[mastereng]

Thanks oigle for your excellent feedback. For years the choice between a diesel engine and a petrol engine could be summarised under three headings - technical (diesel has torque, long life, no electrics but weighs more and is less responsive), capital cost (diesel engines cost more to manufacture and hence to buy) and mpg (diesel engines are inherently more efficicient than a petrol engine so give better mpg). In the last couple of years we have had to add CO2 taxes as another factor in making the choice and now of course the wide disparity in diesel/petrol prices. I am not going to do the math to work out which is the better A Class. I have my 180 CDI on a PCP with 2.5 years to run so I think I'll just enjoy it! :-D

 

[hawk20]

Some facts to correct. The fuel duty on low sulphur diesel is exactly the same as the duty on petrol. That is the diesel we all use. The tax is the same when the price is the same, as it was a year or so back. Now diesel is dearer only the VAT element is higher -but only because the price is higher.

Diesels do 20-30% more mpg than petrol engines and at the moment diesel is 10% dearer than petrol. (132p versus 120p). So you still gain handsomely by having the diesel A class. And with Mercedes the diesel and petrol engines are very similar in price.

Residuals are still higher for diesels and IMO they drive better nowadays especially with autos as they have so much low down grunt and give a relaxed low rev driving style in modern congested traffic. For motorway cruising mine does 80 at 2,000 revs which for a 2 litre diesel automatic is pretty remarkable. Very quiet and economical. On a run now I average about 52 mpg.

Refining capacity has not kept pace with diesel demand. USA has not built new refineries for yonks and we are not much better. Depends who you read, but I've read trade stuff that suggests diesel will come back down to unleaded prices.

From MB data the 2 litre petrol A class has a combined figure of 39.2mpg in manual form and the 2 litre diesel (in the A180cdi) does 54.3 combined in manual form. That is 38.5% more miles per gallon. Swamps the 10% extra you pay for diesel. The auto version is over 33% better in diesel form (52.3 versus 39.2 for petrol).

BTW even the more highly tuned A200cdi diesel which is quicker than the 2 litre petrol, still manages 52.3 in manual form and 49.6 in auto.

 

[johnmc]

Hi,
I agree with Hawk20, diesel is still the best bet, unless your mileage is very low. Longer you keep it, the better of you are. With most Mercs you more than break even on the residuals alone before you turn a wheel.

In the USA diesel supply capacity is very low, and as a result it's 25% more expensive than unleaded. UK capacity is on the low side too, not been able to keep up with the increased sales of diesel cars and that's the problem for us. Even if duty was cut on diesel prices might still rise unless the supply was increased.

I'd like a plug in diesel electric hybrid for my next car. Electric for getting to work, diesel for the long motorway cruising. Ideal.

John

 

[hawk20]

Personally I can’t wait for the stunning new 2.2 litre diesel thay are bringing out in the autumn this year in the C class which will offer the performance of a 320cdi S class with less emissions than the smallest A class! Wow.

And it will fit cars with engines East/West. Put that in my A class and I’ll be very happy! Here’s the link:-
http://mbclub.co.uk/forums/showthread.php?t=50827


And for more on the future from MB this is a great link: -

http://www.emercedesbenz.com/Jun08/...A_Clean_Future_Of_The_Premium_Automobile.html

 

[mastereng]

I think it will have to be a very different A Class to accommodate these new engines. Until I read the following article on plans for replacing the "A" I was unaware that the diesel engine is design specific for the A and B Class, to fit with the sandwich floor and give the excellent crash protection. I guess the next A Class will be totally different from the current model and will be designed to take one of these new engines. It also needs to be substantially cheaper to manufacture.

http://www.autocar.co.uk/News/NewsArticle/Mercedes-Benz-A-Class/233475/

 

[hawk20]

I think it will have to be a very different A Class to accommodate these new engines. Until I read the following article on plans for replacing the "A" I was unaware that the diesel engine is design specific for the A and B Class, to fit with the sandwich floor and give the excellent crash protection. I guess the next A Class will be totally different from the current model and will be designed to take one of these new engines. It also needs to be substantially cheaper to manufacture.

http://www.autocar.co.uk/News/NewsArticle/Mercedes-Benz-A-Class/233475/

I just hope they don't end up just making another Golf.

Lots of A class owners like the high driving position-bit like a 4x4. Hope they keep that (but it comes from the sandwhich floor).