Bloomberg
News Service says diesel has become so highly valued that
traders are paying the biggest premium in 15 years for the
fuel, at $145 a ton. That's 14 percent higher than gasoline.
Worldwide
demand for diesel is expected to grow about 2% in developed
countries in 2008, so that by year end diesel will likely
carry a 31 percent premium over gasoline in Europe, at $190
a ton.
Some
good news though. Gasoline
finally shows signs of 'stalling' because demand for gas in
the U.S., which consumes 43 percent of all gasoline, has fallen
for the first time since 1991 as U.S. drivers drive fewer miles.
It
appears the financial situation for diesel truck
owners may not be improving any time soon.
Big
block gas motors and CNG retrofits, anyone?
Sales of
full-size pickups aren't the only things
falling steeply as fuel prices rapidly rise. Resale values
for diesel powered heavy-duty trucks have crashed, according to vehicle
appraisal and pricing company Black
Book.
Only a year
ago, when regular gasoline averaged $3.16 a gallon and diesel
was $2.80 a gallon, diesel engines carried
a premium at auction.
They were valued an average 20 percent higher than their original option
price in 2005 model year vehicles. In
2007, a 2005 Ford F-250’s
6.0-liter V-8 Power Stroke jumped in value 27 percent, a 2005 Chevrolet
Silverado 2500’s 6.6-liter V-8 Duramax increased 17 percent and
a 2005 Dodge Ram’s 5.9-liter inline six-cylinder was worth 4
percent more than when the truck was new.
Today, fuel
costs have flipped. The average price of diesel has risen by $2.00
a gallon, to $4.80, while regular unleaded has 'only' increased
85 cents, to $4.01 a gallon, according to AAA. The price difference is
costing diesel owners as much as a $1,000 more annually to fill up
their trucks than comparable pickups with gas engines.
As a result,
Black Book's research shows the resale values of 2005 to 2007 diesel-powered
heavy-duty pickups have plummeted an average $5,900 since
January, while gasoline-powered three-quarter and one-tons have fallen
$3,000. $5,900 represents as much as a 20-25 percent decline in
vehicle value.
Some cases
of diesel deflation are extreme. Automotive
News reports Kelley Blue Book puts the average
trade-in for a heavy-duty Silverado or GMC Sierra with a diesel at
about $17,000. A new 2008 Chevrolet Silverado 2500 extended cab pickup
with a Duramax diesel has an MSRP of $36,000.
Diesel engines
have long been the primary choice of heavy-duty truck buyers, who crave
high torque at low engine speeds to get big loads moving quickly and
steady torque over a broad range to climb steep hills. They also tend
to have 15-20 percent better fuel economy than gasoline
engines because diesel fuel has a higher energy content per gallon
and a diesel engine's high
compression ratio and long piston strokes enable the engine to work
harder using less fuel at low RPM.
According
to automotive market-research firm R.L. Polk & Company,
diesels dominated heavy-duty truck sales in 2006, with over 69 percent
engine share.
Diesels
also carry a higher purchase premium, ranging from $5,500 to $7,000.
Their engines and transmissions are built using sturdier components
to handle the higher compression and combustion pressures and torque
output. And newly required emissions hardware (mandated as of January
2007), like diesel particulate filters implemented to reduce soot levels,
has added even more cost and complexity to diesel-equipped HD pickups.
Some estimates put the added costs at $1,500 or more.
The premium
for a diesel equipped truck is expected to rise again next year as manufacturers
roll out new pickups compliant with even tougher 2010 emissions regulations
aimed to reduce nitrogen oxide emissions (NOx). Most NOx-scrubbing engines
will require periodic fill-ups of urea, adding a new maintenance expense
for diesel owners.
