Is Diesel the Fuel of the Future?
Wednesday, September 14th, 2005
By Mitchell Clark, B.Comm. for Profit Confidential
More and more people I know are talking about buying diesel cars to try to beat high gasoline prices. Of course, diesel prices have been on the rise as well. In some jurisdictions, diesel prices are roughly the same as regular gasoline.
Europeans have always been big users of diesel engines. And it’s not just in Volkswagens, but in Mercedes and BMWs too. BMW, in particular, provides a large choice of diesel engines from which to choose in Europe, while we get none over here.
Diesel engines have improved dramatically over the years, and most burn a lot cleaner than they used to. With a diesel engine, you get significant torque at low RPMs, and you get vastly improved mileage, particularly on the highway. Also, because diesel engines use compression to fire the cylinders, there is less hardware that goes into the engine, and many view these engines as longer lasting than traditional gasoline engines.
The downside to diesel engines is that they may be harder to start in winter climates (you have to use a block heater) and not all gasoline retailers offer diesel fuel for sale.
There aren’t many options for consumers who want to buy a domestic diesel vehicle. They are mainly offered in heavy duty trucks. The Jeep Liberty is offering a diesel engine as an option in its compact SUV, but it is expensive.
It’s not surprising that diesel engines are expensive and relatively rare in North America, as the infrastructure just isn’t here. This is changing, however, and I know that consumers are becoming more interested in diesel powered vehicles because of high gas prices.
More diesel engines from domestic manufacturers would be a blessing for consumers. Of course, with more demand comes higher prices. You can’t escape the laws of economics. When the natural gas industry was promoting its furnaces as more efficient and cheaper to operate, everyone installed gas furnaces in new homes instead of using heating oil. As more and more homes started using natural gas, the price of that commodity went up. Now, it’s at record highs. I’d like to own a diesel vehicle, and I may go for one when it’s time for a new car. Rest assured, if more and more consumers go for diesel powered vehicles, the price of diesel fuel will most definitely go up. However, you’d still get better mileage on the road.
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Tags: oil stocks, stock market
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Mitchell is a Senior Editor at Lombardi Financial specializing in small-cap stocks. He’s the editor of a variety of popular Lombardi Financial newsletters, such as Penny Stock Reporter, Micro-Cap Stocks, and Monster Profits. Mitchell, who has been with Lombardi Financial for thirteen years, won the Jack Madden Prize in economic history and is a long-time student of equity markets. Prior to joining Lombardi, Mitchell was as a stock broker for a large investment bank. While Mitchell is not working he enjoys fly fishing, motorcycling and tending to his hobby farm.
