[Scotsman]

This guy hit the nail on the head in his analysis of the sudden spike in diesel prices.

Wednesday, April 16, 2008
John McCormick: Car culture
Big Oil seems slick as U.S. turns to diesel cars

It's high time for the big oil companies to explain one of life's great mysteries; exactly how they fix the price of fuel at the filling station. The public has heard all sorts of explanations -- market forces, regional instability, refinery issues and so on -- but the logic behind the ups and downs (mostly ups) of gas prices is about as transparent as an IRS tax form.

This topic is a burning concern not just because of costlier gasoline, which is, of course, a major drag on the U.S. economy and which affects all of our lives. It is also pertinent when it comes to diesel fuel, which, for no apparent reason, recently leapt up in price, well above the level of gasoline. Perversely, this has occurred just as consumer interest in fuel-efficient diesel vehicles is on the rise and as several major automakers are launching a new wave of advanced, clean diesel models.

Conspiracies bloom

As if this problem were not enough of a concern, diesel is also the fuel that heavy trucks and trains use to transport all kinds of goods, including food products, around the country. Speaking of food, farmers rely on diesel to run most of their equipment. Consequently, higher diesel fuel prices are driving up the cost of many of our basic necessities.

Conspiracy theorists would suggest that somehow the whole mess is the fault of an unhealthy combination of a despotic Saudi ruling dynasty, greedy oil companies and -- lest we forget -- an ex-oil man in the White House. Given the outrageous sums of money sloshing around the world's oil-rich nations, and the record smashing profits recorded by the oil companies in recent years, it's hard to argue that something is not seriously wrong with the picture.

Advertisement

When fuel prices spike, one of the excuses that oil company executives usually trot out is that a refinery fire, or lack of refining capacity are to blame. In the case of diesel they whine that assigning refinery resources to producing diesel is problematic or too expensive, as if they don't have the cash in the bank to do something about it.

If auto companies were making giant profits like the oil industry and there was sufficient consumer demand for vehicles, they would build new plants in a hurry, even though factories (like oil refineries) cost billions of dollars.

Anti-diesel effort brewing?

It's bad enough that gas prices are shooting up, but Big Oil's reluctance to produce sufficient supplies of diesel -- thus driving up the price -- does seem like an effort to snuff out a promising, extremely fuel-efficient technology just as it gains a foothold in the United States, the world's most energy profligate nation.

Though some automakers are working on credible hybrid gasoline powertrains for the U.S. market, the fact is that the latest light-duty diesel models use less fuel than hybrids in normal driving. Third-party tests to date comparing the two powertrain systems have all proven the point. And while diesel engines are expensive and require pricey exhaust after-treatment systems, hybrids are also complex and cost thousands more to produce than regular gasoline models, so there is marginal difference one way or another financially.

So why is diesel suddenly so expensive just when the country needs it badly? That's a question that Congress should be asking oil executives next time it has them lined up for a grilling.

http://www.detnews.com/apps/pbcs.dll...15/1148/AUTO01