Trouble for Diesel on the horizon?

Gasoline continues to outperform diesel in the ‘On-road Demand Sweepstakes,’ for light trucks.

Indeed, the sales of these Plus SUV’s, and their funny cousins in the attic, the Crossover, are outselling staid old sedans by two to one. Colour me quizzical, but why aren’t these heavy duty and amazingly popular pick-up behemoth trucks powered by diesel in North America? The answer may be the fact that diesel-powered vehicles have always struggled with an image problem, that they’re dirty, noisy and smelly; but these claims were countered with better fuel economy, lower maintenance costs, and lower total CO2 emissions due to greater miles per gallon. Try as they may, manufacturers have realized that the North American light truck market is one of gasoline.

 The popularity of diesel is being eroded by the gasoline-powered car’s ever increasing fuel efficiency, and the noticeable availability of hybrids now, and possibly the electric powered vehicle (EV) option later.

 Convincing the consumer to switch from gasoline to a diesel powered alternative is a struggle in North America, and it’s an argument they may well lose. Diesel’s market share in the U.S. has marginally increased from 1.3% in 2013 to 6.0% today. The possibility of reaching double digits is becoming doubtful at best. The most serious threat to the future of diesel in North America is the successful claim that Volkswagen (VW) had deliberately installed defeat devices to evade U.S. emission standards. With current penalty and buy back costs approaching $17 billion, VW has reported, with a straight face, that it is unlikely they will return to the North American market.

 No kidding!

 In Europe, diesel is the dominant fuel of choice, but its position may be on shaky ground as well.

 In the U.K., diesel’s sales of new vehicles have increased from18% in 2001 to 50% today. In Norway, Luxemburg, and Belgium diesel has 78% of the market. Much of the rush to diesel was based on the same benefit claims as I mentioned above. Further incentives were offered in the form of road tax reductions. Vehicles were graded on their CO2 emission levels. Those with the highest levels paid the highest road taxes, and those with the lowest paid none.

Sort of a reverse carbon tax…Trudeaulites and Wayward Wynnearians take note!

But now, the once again isolated British, and the rest of their former family in the E.U. are having second thoughts on diesel. They’re now focusing on diesel emissions in addition to CO2. These are the black particulates in a carcinogenic alphabet soup that includes arsenic, formaldehyde and benzene to name but a few. If diesel vehicle manufacturers thought that increasing gasoline fuel efficiency, hybrids, and EVs were a competitive problem, wait until the consumer and environmental activists start asking the “C” questions.

 There seem to be too many questions coming up on the horizon aimed at light trucks, but the long haul heavy transport will be an optically bigger target.

 Fleet owners beware.

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Roger McKnight is the Chief Petroleum Analyst with En-Pro International Inc.
Roger has over 25 years experience in the oil industry, and has held senior marketing management positions responsible for national and international accounts. He is the originator of the card lock concept of marketing on-road diesel that is now the predominant purchase method of diesel in Canada. Roger's knowledge of the oil industry in North America, and pricing structures has resulted in his expertise being sought as a commentator by local, national, and international media. Roger is a regular guest on radio and television programs, and he is quoted regularly in newspapers and magazines across Canada.

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