|The price gap between diesel and gasoline has been expanding, most visibly in the California market. Click to enlarge.|
The price of diesel jumped past the $5.00/gallon mark in California this week to $5.027—a 69% increase from one year ago, according to the latest data from the US Energy Information Administration. The average price for retail on-road diesel across the US was $4.731/gallon.
The average price for gasoline (all formulations) in California for the same period was $4.099/gallon. The average price of gasoline across the US as reported for this week was $3.937/gallon. The premium between diesel and average gasoline prices in California for the week is $0.928/gallon, or a 23% price premium for diesel on average. nationwide, the premium is $0.794/gallon price premium, or 20%.
The increasing—and persistent—gap between diesel and gasoline—which is beginning to eliminate the fuel consumption advantage of diesel over gasoline engines—could negatively affect the adoption of diesel powertrains, just as they are beginning to come back into the market.
In a presentation during a workshop discussing policy mechanisms for further reductions in vehicle greenhouse gas emissions at the California Air Resources Board (earlier post), Dr. Ken Kurani of the UC Davis Institute of Transportation Studies (ITS-Davis) noted that in the past, adoption of alternative fuel powertrains has dropped precipitously once the perceived price benefit of the switch decreases or disappears.
|Click to enlarge.|
He specifically noted the example of the adoption of diesels in California in the 1970s and 1980s, with a plot of diesel vehicle sales against the price of gasoline and diesel. With diesel priced lower than gasoline, sales rose; once diesel prices exceeded those of gasoline, sales dropped sharply. (See chart at right.)
When prices are more than prices and not everything of value is priced (Ken Kurani, ITS-Davis)