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By Robert Rapier on Jul 10, 2008 with no responses

Diesel or Gasoline?

I hear a lot of questions about the economics of a diesel engine versus a gasoline engine, given the fact that diesel prices are now much higher than gasoline (and likely to remain that way).

Diesels have two things going for them. First, a gallon of diesel contains more energy than a gallon of gasoline. Second, a diesel engine achieves a higher compression ratio, and gets more useful work out of the engine. Diesels are estimated to be around 30% more efficient than combustion engines.

I checked the EPA’s site on fuel efficiency – http://www.fueleconomy.gov – and compared a 2009 Volkswagen Jetta on diesel versus gasoline. Comparing identical cars – 2-L, 4-cylinder, 6-speed manual transmission shows that the diesel version gets 36% better fuel efficiency.

If I factor in diesel’s higher price – the EPA assumed $4.65 for diesel and $4.33 for premium gasoline – it costs $3.42 to drive 25 miles on diesel and $4.33 to drive 25 miles on gasoline. The annual fuel costs, assuming 15,000 miles of driving, was $2051 on diesel and $2598 on gasoline.

The diesel engine will set you back a few more thousand dollars than the gasoline engine. It is hard to get a direct comparison, but a search of Edmunds indicates that Volkswagen’s diesel models are at least $2,000 more expensive than comparable gasoline models. If we assume no time value for money, you are going to have to drive about 55,000 miles before you save $2,000 in fuel costs (based on today’s prices).

It just wouldn’t pay off for someone like me who doesn’t drive more than 5,000 miles a year. I am not even sure I drive enough miles to justify paying the extra cash for a Prius. I need to run those numbers next.