A
variety of factors may cause U.S.
automakers to push more vehicles that use
diesel fuel into the U.S.
market. As refiners move to catch the trend,
it’s possible that increased total
demand for diesel will push prices up for
carriers and shippers.
The
U.S.
lags far behind the rest of the world in
diesel usage for passenger vehicles. In
2005, the last year for which data is available,
only 3.2% of new personal vehicle sales
were diesel-based, according to JD Powers.
Contrast that with 50% of new vehicle sales
in Europe,
and 7.4% in Asia.
However, JD Power estimates the U.S.
number will approximately double by 2011
to 6.6% of new vehicle sales, exceeding
sales of so-called hybrid vehicles. Some
people think even that number may be low.
The key advantage
for diesel – about a 30% improvement
in miles per gallon over conventional gasoline.
This means diesel not only would have a
strong economic appeal for consumers pinched
by spiking gas prices, but also means there
is less carbon dioxide produced per driven
mile as well, making it more friendly to
global warming concerns.
Diesel usage
has been challenged for producing other
types of pollution, however, and that has
held back its growth. Key will be the ability
of automakers to produce diesel engines
that can meet current and likely even stiffer
regulations on vehicle emissions. Honda
GM, Ford and Chrysler are all devoting significant
resources towards diesel-based passenger
models.
Betting
on that trend, Marathon Oil recently announced
it was substantially expanding a refining
facility in Louisiana
that already makes about twice as much diesel
fuel than regular gas. Marathon
expresses a very bullish view on the growth
of diesel.
The potential
risk to carriers and shippers – if
consumer demand moves faster than refining
capacity for diesel, it will put upward
pressure on diesel costs. |