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Next time, think diesel
May 1, 2006, by Bill Cawthon
I usually avoid current events or social commentary in these columns, but gasoline prices are big news these days. Yesterday, I paid $2.82 per gallon for regular unleaded in suburban Houston. Shopping around in Promotex's home town of Altona, Manitoba will get a liter of gasoline for about $1.06 Canadian. That's about $3.59 American per gallon.
In the U.S., which enjoys some of the lowest prices of any western nation, the national average is currently $2.923 for a gallon of unleaded. That's just over $0.772 per liter. We're still over thirteen cents a gallon off the record prices set last September after Katrina erased New Orleans, but almost seventy cents ahead of this time last year.
Everyone wants somebody to do something, especially as companies like ExxonMobil and ChevronTexaco report some of the highest profits in the history of commerce. But the reality is there isn't much anyone can do. Repeated investigations have shown no evidence of price-fixing or collusion by the oil companies. We tried a windfall profits tax and it didn't work. Some of the rebate ideas being floated around as political window-dressing will barely fill the tank of the average full-size pickup and the "tax vacation" proposals will just make the federal deficit even bigger.
In Beeville, Texas, which is about 295 miles southwest of Houston and 56 miles northwest of Corpus Christi, the Bee County Commissioners Court has called for a boycott of ExxonMobil until pump prices are back down to $1.30 per gallon. I suppose we could attribute this idea to excessive partying in the sheriff's evidence room, but it doesn't make much sense otherwise. Especially since the county gets a fair share of its annual revenue from oil and gas taxes and the only people it will really hurt are the local franchised ExxonMobil retailers. Frankly, we're more likely to see $4.00 or more per gallon than $1.30 anytime soon.
So what can the government do? Not much.
Part of the problem we're facing now is the high price of oil, which is due largely to speculation and increased competition from developing nations like China. But another large part of the current price at the pump is the lack of refining capacity. We're not just importing oil; we're importing refined products, too. We import about 10% of our gasoline from Europe and South America. Some of that is due to the capacity knocked out by Katrina, but much of it is because, even when all the facilities are online, we still have less refining capacity than we did twenty-five years ago. Last year, Saudi Arabian Crown Prince Abdullah reminded President Bush that more oil could be sent, but the U.S. couldn't refine it.
There has been no new refinery construction in the U.S. since 1976. In fact, according to testimony presented to Congress in September 2000, the Environmental Protection Agency received only one application for construction of a new refinery from 1975 to 2000. There has been a lot of investment in upgrading existing facilities, but not enough. We still have 1.6 million barrels per day less capacity that we did in 1980 so there is no slack left in the system to cope with the increased demands we are making on the supply of gasoline, diesel fuel and other refined products.
There has also been an increase in drilling activity and the rig count is up so despite what some people claim it doesn't look like the oil companies have been deliberately starving the market. But costs of exploration and production are up sharply, too. Since those costs have to be recovered, the price at the pump looks like it will continue to rise each year, a fact we might as well get used to.
So what's the solution? As with most any problem, the solution begins with us. This is only fair, since the problem started with us.
These days, despite all the grief and downsizing in Detroit, we're buying more cars and trucks than ever before. Light vehicle sales in every year of the 21st century would have been an all-time record in every year up to the very end of the 20th century. From 1980 to 2004, the U.S. Department of Transportation reports the number of registered vehicles rose from 161,490,151 to 243,023,485. That's about a 50% increase. We've added almost 15 million passenger cars to the fleet but the real kicker is that we've added almost 64 million light trucks.
From 1980 to 2005, the sales-weighted average fuel economy of light trucks increased by 2.6 mile per gallon. Yup, that's it. In 1980, the average was 18.1 mpg and last year it was 20.5. Cars have done better, going from an average of 23.2 mpg to 28.7 mpg, but no matter how you cut it, the increase in the number of vehicles has overwhelmed the savings from improved efficiency.
We're driving more miles, too: Lots of them. In 1980, Americans racked up 1,572,295,000,000 vehicle-miles. By 2004, that total had grown to 2,962,513,000,000, an increase of nearly 89%. That's more than 1.39 trillion additional miles.
We aren't even economizing on our way to work. Since 1985 single-occupant passenger vehicle commutes have increased from 72.4% to 79.4% of the total as carpooling and public transportation usage have declined. Carpooling dropped from 14.1% to 8.7% as we forgot everything we supposedly learned in the gas lines of the early 1980s.
The result of all these extra vehicles and miles is a daily gasoline consumption that has grown to 20.6 million barrels a day. The only way to bring the price down is to use less of it.
There are bunches of suggestions, but one way occurred to me as I was looking over my Herpa collection. Beginning in September, American refiners will have to produce ultra-low sulfur diesel fuel. This means auto companies can begin importing or building the modern diesel engines that account for a large percentage of European light vehicle sales.
What does this mean? It means we could get some very interesting cars that will do a good job of lowering your monthly fuel bill.
The Audi A3 Sportback 2.0 TDi hits 129 miles per hour and delivers an estimated 33.6 mpg in city driving and nearly 40 mpg overall. BMW's 120d has a top speed of 137 mph and gets better than 41 miles per gallon from its 2-liter diesel. Both of these could be imported to the U.S.
For something a bit roomier, the Mercedes-Benz B200 CDi hits 120 mph and gets 29 mpg in city driving and 39 mpg Highway. Perhaps Mercedes will get tired of paying gas-guzzler taxes and bring it to the U.S. as was originally planned.
Then there's the Smart which DaimlerChrysler this week says it will likely bring to the U.S. The Smart ForTwo with the 800cc 3-cylinder diesel only gets up to about 83 mph but it will go about 51 miles on a gallon of No. 2 diesel in town. Yes, it's small, but if you use it to commute, its fuel cost is less than six cents per mile. This means you'll have more money for family trips in the SUV or minivan.
If you need a larger car, consider this comparison: a Mercedes E320 sedan with a 3.2-liter 6-cylinder engine is EPA rated at 19 mpg city and 27 on the highway. The same car with a diesel is rated at 27 city and 37 on the highway. Counting only the city mileage, the gasoline cost per mile is about 15.4 cents for the gasoline engine. The diesel cost is about 10.9 cents, despite the higher price of diesel fuel.
And the diesel is no slouch. It's only one-tenth of a second slower to sixty than the gasoline-powered version. About a year ago, Mercedes-Benz ran three diesel-powered E320 sedans non-stop for 100,000 miles at a test track in El Paso, Texas. The cars averaged 139 miles per hour and got 18 miles per gallon at that speed.
Volkswagen has been selling diesels in the U.S. for a while. The Golf and New Beetle, equipped with VW's current 1.9-liter diesel engine, are rated at 37 City and 44 Highway. But the new low-sulfur fuel requirements mean we could get VW's latest diesel, which delivers similar mileage along with an 8.2 second 0-62 time and a top speed of 130 miles per hour.
Maybe these numbers don't seem impressive compared to the claims for hybrids but they look pretty good compared to where we are now. Yes, diesels are more expensive than conventional gasoline engines but considering the direction gasoline prices seem to be headed over the long term they can be a wise investment. Most important, they will cut the amount of money you have to spend on fuel over the entire time you own the vehicle, no matter what type of vehicle you need. One last point to consider: diesels don't actually need petroleum. They can run just fine on fuels developed from biomass, a renewable resource.
Of course, diesel isn't the only option. When Marge and I decided it was time for a new car, we wanted comfort, performance and decent fuel economy. We had intended to look into a diesel, but there weren't any available. We settled on a Volkswagen Passat with the 2.0-liter turbocharged engine. We're getting an honest 22 mpg in stop-and-go city traffic, which may not sound like much but is almost a 28% improvement over the 15 mpg we were getting in town with our minivan. Looking at it another way, we're getting a very nice discount on our monthly gasoline expense while driving a very pleasant car.
Next time you're in the market for a new vehicle, take some time to really consider alternatives with an open mind. In the meantime, check out the Herpa models of the Audi, BMW and Mercedes B-Class as a reminder there is technology to help us reduce our oil consumption while keeping driving enjoyable and affordable.
See you next time!
- Bill Cawthon
Bill Cawthon is a modeler and collector. His primary hobby interests are vehicle models in 1:87 and 1:160 scales and model railroading. He is one of the creators of the award-winning "Grimy Gulch" model railroad layout.
In real life, Bill is a marketing and public relations consultant working with the information technology and hobby industries. He is an associate editor for Model Railroad News and writes a monthly column on the U.S. light vehicle industry. He is a member of the 1/87 Vehicle Club and the Texas Auto Writers Association.
He lives in Houston, Texas with his wife, Marge, and their children.
Bill's columns appear twice monthly on Promotex Online. To learn more about him, click here.
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