Yum...diesel!

In 2005, transportation accounted for 28 percent of energy consumption in the U.S., according to the Energy Information Administration (EIA). It came in just behind industry, at 32 percent, and ahead of residential and commercial (22 and 18 percent respectively). We expend about 28 QUADRILLION British thermal units of energy per year on transportation. Wow! That is something I feel completely unable to connect to any sort of reference point. It is astonishing that those quadrillions are only a fraction of U.S. energy consumption. But they are an important fraction and a place where there is space for some innovative reduction.

There is something sort of exciting going on in the transportation market right now in the U.S. I'm not talking about the introduction of the Hummer H7 Hybrid. I am talking about the utlra-low-sulfer diesel fuel requirement that will take effect on October 15 of this year. What does this mean?

1). The main benefit of the low-sulfer fuel is that it allows diesels to be outfitted with pollution-reducing technologies like particulate matter filters and oxidation catalysts. Basically, less soot and garbage spewing from the tailpipe. Fewer obnoxious fumes. Good times.

2). The diesel car market in the U.S. can grow significantly. They are already using "clean" diesel in Europe, where diesel car sales are expected to surpass gasoline this year. Making this kind of diesel available at U.S. pumps means that the Euros will need to make very few modifications to sell them over here. Check out some of the new models here and here.

3). You won't be able to buy a new diesel Volkswagen in the 2006 or 2007 model years and some other manufacturers are likely to take the year off as well. Most are taking these two years to refine their designs for the 2008 model year.

4). My fondest dream - the introduction of the diesel hybrid - may finally become a reality.

Right now, driving a diesel can be somewhat of a moral trade-off situation. Do I care more about air pollution or global warming? When I bought my Beetle TDI, I chose global warming. Diesel fuel just has a lot more concentrated energy in it than gasoline, resulting in amazing mileage - anywhere from 40 to 50 miles per gallon. Right now I'm avoiding the moral dilemma during the summer by using 99% biodiesel and getting significant reductions in pollution along with decent milage. Mileage is reduced a little with biodiesel, closer to 35 or 40 mpg. Still pretty fabulous compared to the majority of U.S. cars. But nobody's figured out the magic ingredient that will allow one to use it over the course of a Midwestern winter without it turning to butter. Diesels are talked about quite a lot as an alternative to a hybrid. But what about combining these technologies for a super-mileage vehicle?

Way back in 2005 General Motors worked with DaimlerChrysler on a diesel hybrid concept car called the Opel Astra - a sedan that got about 59 mpg. Volkswagon's diesel-electric prototype, engineered around that same time period, achieved 118 miles per gallon. Mercedes, Ford, Nissan and PSA Peugeot Citroen have also struggled to design a doable diesel-hybrid concept car. I'm sure that list isn't exhaustive, but the interest of major auto makers indicates that it's an idea with market merit.

Unfortunately, current costs for these cars are keeping them stuck in the concept stage. Some estimates put them at $8,000 to $10,000 above a conventional diesel. Conventional diesel cars already cost about 10% more than gasoline cars, so herein lies the problem. If you're dealing with a high-cost item, like a transit bus, then it's a smaller increase as a percentage of the price. Hence, the technology has already hit the road, so to speak, in that market. But adding $8,000 to a $30,000 vehicle, just for example, is a 27% price increase. That hurts. It's almost un-American, if you ask me.

But just to be reasonable about this, let's do some calculations. My VW New Beetle TDI gets 45 mpg (my estimate) with conventional diesel. If mileage for a diesel hybrid was in the middle of the two examples above, I could expect 90 mpg. That's doubling my efficiency. Diesel is at a nationwide average of $3.03 per gallon this week. Assuming 30,000 miles driven in one year, you'd save about $1,000 in fuel costs per year. If the hybrid costs $8,000 more upfront, that's 8 long years to make up your initial investment, compared to a conventional diesel.

What about compared to a gasoline vehicle? Gas is at $2.97 this week. A New Beetle with a gasoline engine gets an average of 26.5 mpg according to the VW website. Assuming also 30,000 miles on this car, a diesel hybrid would save you $2,350 per year in fuel costs. It pays off in a much shorter 3.4 years. But is it worth it? I'm curious. This calls for one final comparison:

A brand new VW New Beetle with a gas engine is listed at $17,180. A new VW New Beetle TDI is $18,900. The website specs say the TDI gets an average of 40.5 mpg, which seems low, but we'll go with it. All other assumptions as above, you save $1,100 per year and recoup your extra cost in 1.6 years and don't have to worry about ever replacing an expensive battery pack. From a consumer's standpoint, this is by far a better deal with a benefit that keeps on giving. If you drive your car for 10 years, you've saved $11,000 in fuel. And that's assuming prices remain around $3.00 per gallon, which seems highly unlikely. At $4.00 per gallon, your 10-year savings would be closer to $16,000.

However, this whole question is about a whole lot more than you and me and our Gucci knock-off purses/wallets. There are those bigger moral questions I mentioned above - what about global warming? And what about air pollution? And, you know, what about when all the oil is almost gone? I'm personally really disinterested in World War III (the Oil War) if one can believe we haven't yet gone there.

A 2003 MIT study found that investing with a vengeance in diesel hybrid technology could result, by 2020, in a class of cars twice as efficient and half as polluting as today's gasoline hybrids. The same study found that hydrogen - emphasized by the current administration as the answer - could not achieve these same results over this time period.

I am not complaining without a resolution. Here is one last, I promise the last, calculation. At $4.00 per gallon, a diesel hybrid would save $3,200 per year in fuel costs over a conventional gasoline engine- erasing the $10,000 premium ($2,000 extra for diesel and $8,000 for the hybrid) in a little over 3 years of driving. Increasing the gas tax could get us there. A subsidy similar to what we've seen for gasoline hybrids wouldn't hurt either. Or, for a more labor-intensive approach, we could take an in-depth look at the ways current U.S. government policies distort the oil market through tax breaks and subsidies and make changes where necessary.

Demand drives the market and manufacturers will bring these cars online if there is enough interest. That intesest won't arise until fuel prices reach a certain level. It seems to me to be a moral imperative to allow the market to move, or to drive it if necessary, in the direction of sustainability. MIT tells us that diesel hybrids are the fastest way there.

I'm sure the opinion above would not get me invited to a White House dinner. There are macroeconomic arguments to be made in the short run. But weigh these against the possibility of losing polar bears and coral reefs in our generation, against the toll of war, and against doing nothing. How does that make the world look, 50 years from now? How does it look if you choose the change? A temporary increase in energy prices does not the downfall of a society make. And 50 years from now, I believe our grandchildren would certainly be thanking us for the sacrifice we made, for them.