Gas and Diesel Prices Close, But Consumers Not Ready To Rethink Vehicle Choices | Edmunds

Gas and Diesel Prices Close, But Consumers Not Ready To Rethink Vehicle Choices

SANTA MONICA, California — The retail prices of diesel fuel and gasoline are the closest they've been in six years, according to market analysis firm Price Futures Group.

That could spell good news for consumers, who now have a wide variety of diesel-powered passenger cars, SUVs and crossovers to choose from, including the Audi A3, BMW X5, Mercedes-Benz E-Class, Porsche Cayenne Diesel, Volkswagen Golf and Volkswagen Jetta TDI.

But car shoppers aren't flocking to diesel models in droves.

According to the latest Edmunds' data for January-April 2015, diesel models make up 2.9 percent of U.S. retail vehicle registrations. Although that's up from 2.3 percent for the same period in 2010, it's actually a reduction from this time last year when diesels made up 3.1 percent of registrations.

Said Jeremy Acevedo, supervisor of pricing and industry analysis for Edmunds: "Although there is a narrowing gap between the price of gasoline and diesel (indeed, diesel is quite a bit cheaper in some areas), it does not seem like the market is particularly receptive to diesel models right now."

As an example, Edmunds data show that retail demand for Volkswagen's diesel-powered passenger cars for January through April of this year accounts for 21 percent of the brand's sales, its lowest share since 2010.

One reason for this, said Acevedo: "The small drop in diesel-market share likely has quite a lot to do with today's relatively low price of gasoline. Gasoline priced at some of the lowest levels we've seen in years has certainly made gas-powered models (especially light trucks) more popular. The independent trajectory of gasoline and diesel prices mean that diesel's presently low price has been eclipsed by gasoline's own low prices."

Phil Flynn, senior market analyst at Price Futures Group, noted in his blog that gas prices have risen a bit recently, while the cost of diesel has fallen by about 25 cents per gallon. Not only does that result in the smallest difference between the two in six years, but Flynn says it may "all but disappear" over the next two weeks.

According to the AAA Daily Fuel Gauge Report, on Tuesday, a gallon of regular gasoline averaged 8 cents per gallon less than diesel. A year ago that difference was more than 20 cents.

The primary reason that the cost of the two types of fuel is getting closer is not that diesel is getting so much cheaper, it's that demand for gasoline is on the rise.

The U.S. Energy Information Administration is projecting that during the summer 2015 driving season, the U.S. will consume 9.2 million barrels of gas per day, an increase of 1.6 percent over last year.

Still there are those consumers who favor the advantages of diesel power for a couple fairly persuasive reasons.

Noted Allen Schaeffer, executive director of the Diesel Technology Forum: "Clean diesel cars, trucks and SUVs typically achieve an impressive 20-40 percent improvement in fuel economy and 10-20 percent reduction in emissions when compared to a similar gasoline-powered vehicles."

And if gasoline and diesel costs keep getting closer, more U.S. consumers are likely to rethink their choice of fuel.

Concluded Schaeffer: "While diesel passenger vehicles currently make up a modest 2.88 percent of the entire U.S. vehicle market, Diesel Technology Forum has collected consensus forecasts from many other auto and market analysts who predict that diesel cars, pickups and SUVs will comprise about 7 percent of the market by 2020 or just over 1 million diesel-powered cars and trucks on the road."

Edmunds says: Consumers interested in learning more about diesel vehicles should visit the Edmunds Diesel Center.

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