Diesels (Still) Equal Savings

But if diesel fuel prices continue to increase, even greater efficiency won’t be enough to make diesel engines a good buy

With the price of diesel fuel pushing $5 a gallon, many Americans might not think this is the best time to buy a diesel car or sport-utility vehicle. But they’d be mistaken.

The fact of the matter is that even though the price of a gallon of diesel has climbed more than 20% in the past 12 months, diesel cars still offer better gas mileage

That’s good news for German import brands like Audi, BMW, Mercedes-Benz, and Volkswagen, who are launching a wave of new clean-diesel cars in the U.S. starting this fall and into 2009 and beyond. Domestic and Asian manufacturers also have plans to offer more diesels in the U.S. market.

But the timing of these new diesels isn’t very auspicious. The sharp rise in diesel fuel has cut deeply into the diesel cost advantage in miles per gallon. There is real concern that unless refineries start producing more diesel, the prices will escalate beyond the point that a diesel can offer any cost benefit.

Business Week