Taken from Go-Auto 28/5/08

By MARTON PETTENDY
THE increasing disparity between petrol and
diesel pump prices due to soaring demand for
diesel fuel in Asia has dramatically increased
the length of time it takes to recoup the extra
cost of purchasing diesel cars, a GoAuto
investigation has revealed.
The retail price of diesel in Sydney last week
reached $1.80 per litre – up to 35 cents more
than unleaded petrol at the same sites – and
experts predict the recent earthquake in China
could further increase the demand for diesel
there and therefore its retail price here.
The soaring cost of diesel, which has on
average increased more than 17 per cent so
far this year – far outstripping petrol but still
well below the international benchmark diesel
price rise of 40 per cent in Australian dollars in
2008 – has also attracted the attention of petrol
commissioner Pat Walker.
Last year, sales of petrol passenger cars to
business purchasers rose by more than 88 per
cent and sales to private buyers increased by
almost 63 per cent. Sales of diesel passenger
cars to private buyers have risen more than 50
per cent so far this year while private petrol car
sales have dropped by fi ve per cent.
In February, BMW predicted that diesel
models could comprise up to 80 per cent of its
sales within fi ve years and SsangYong has this
year repositioned its brand to offer an all-diesel
range. Data provided exclusively to GoAuto by
JATO Dynamics reveals that many European
brands are more reliant on diesel car sales than
ever. Peugeot increased its mix of diesel vehicle
sales from about 11 per cent in 2003 to more
than 52 per cent last year, while Volkswagen
went from just over a one per cent share of diesel
sales in 2003 to 46.5 per cent in 2007. Others,
including Alfa Romeo, Saab, Dodge, Chrysler
and Renault, have increased their diesel sales
mix from zero in 2003 to more than 30, 27, 16,
13 and 13 per cent respectively.
Diesel vehicles remain a tiny proportion of
overall new passenger car sales in Australia,
but that could soon change with news last week
that Holden has committed to producing a diesel
Commodore within two years, joining Ford which
last month confi rmed to GoAuto that it plans to
offer diesel versions of both its homegrown
Territory and Falcon models from 2010.
This time 12 months ago the wholesale
diesel price was $121.83 and unleaded petrol
cost $127.73 wholesale, making diesel roughly
six cents cheaper than petrol a year ago.
Based on the current wholesale price
disparity between petrol and diesel of 23 cents
per litre and an average annual mileage of
20,000km, it will take BMW 320d drivers more
than eight years to pay off their car’s $3100
higher purchase price over the equivalent 320i,
while the Hyundai i30 diesel’s $3500 price
premium over its petrol sibling will take more
than 11 years to recoup.
Calculated on a $4000 price premium over
the equivalent petrol version and an ADR81/01
average fuel consumption estimate of 8.5 litres
per 100km (compared with 10.8L/100km for the
petrol), it will take buyers of the forthcoming
Commodore diesel more than 12 years to pay
off their diesel investment. Twelve years!
Before the rapid diesel price hikes that
began about a year ago, Ford predicted a diesel
version of its Falcon would take between three
and fi ve years to offset its extra cost. Using the
same formula, a Falcon diesel could take an
extra 17 years to pay for itself on current diesel
prices. Let us repeat: 17 years.

The figures are much worse when calculated
on the average retail price differential between
petrol and diesel of about 30 cents nationally, let
alone the 35-cent disparity seen at some outlets
in Sydney last week. In those cases, the diesel
purchase price premium pay-back period is
beyond 30 years for the oil-burning Commodore
and more than 40 years for the Falcon.
The RACV’s government relations manager
David Cumming told GoAuto this week that
the widening gap between petrol and diesel
prices was a direct result of booming demand
for diesel in Asia, and the fact that Australian
crude oil prices were linked to the Tapas crude
oil price in Singapore.
“For 25 years the two (petrol and diesel) were
on (price) parity or diesel was slightly below it
and demand for diesel in Asia is the only reason
we pay a premium now,” he said.
“The disparity has come about purely
because diesel operates on the same market
price in Singapore – the defi ned product price.
Asia runs on diesel and China and India’s
demand for diesel is immense. Unleaded is
almost a by-product in Singapore.”
He said the price premium for diesel was
expected by some quarters to continue to climb.
“I’m led to believe there’s a supply and
demand imbalance in Asia for diesel which
leads to a premium being paid in Australia.
There’s a view that in the wake of the
earthquake they may even consume more
diesel, because the only way they’re going to
be able to get electricity into those devastated
areas is with diesel engines,” he said.
Mr Cumming said the diesel price hike,
which has also been exacerbated by stockpiling
by major Chinese refi ners ahead of the Olympic
Games, was bad news for both current owners
of diesel vehicles and customers of new and
upcoming diesel passenger models, many of
which have or will become available because
of increased demand and improved Australian
diesel fuel quality standards.
“And of course the timing couldn’t be
worse – just when all these new diesel-engined
passenger cars are starting to come to Australia.
“People can communicate with us via our
website and I had more than 20 complaints last
week from diesel people. Nearly all of them
are saying they’re considering selling their
car, but I don’t know if their car is going to be
worth very much,” he said.
Mr Cumming said that last week’s $139 price
high for Tapas crude oil in Singapore, which
has since reduced to $127, would not fl ow
through to pump prices for a month or so, but
he was reluctant to join in recent predictions of
$2.00-per-litre petrol by the end of this year.
“I’ve never put my head out that far.
I’m prepared to do it on a fortnightly-byfortnightly
basis. Anybody that’s prepared to
go out there and say $2.00 by the end of the
year is a very game man. These prices are not
about supply and demand. This is purely what
the speculators have got out of the US dollar. It
appears to be a bit of a game now, to see how
far they can push it,” he said.
“Where are we going with diesel? No doubt
$1.90 in the foreseeable future is possible.”
Mr Cumming said he had no problem with
retail fuel prices, with the Melbourne fuel
market taking an average profi t margin of just
four cents per litre at the moment, and reiterated
the fact that only a very small percentage of
diesel is sold to private motorists.
“That’s why there is no competition over
the board price for diesel, because all the big
boys either buy it bulk on contract or long-term
tender. In many cases they probably would
have hedged their costs anyway – they might
have a fi xed-term contract for 12 months and
may well be buying at last year’s price right
now.”
But he again took aim at federal government
inaction on what the RACV has long described
as a tax on a tax: the 10 per cent GST surcharge
on top of the 38.1 CPL federal government
(petrol and diesel) fuel excise. Once again the
latter applies only to private motorists, with
trucks over 4.2 tonnes paying only 19.6 cents
a litre excise plus GST, and farmers, miners,
railways, forestry workers and the like all
paying no excise or gaining a tax rebate.

Full story here.
http://www.goauto.com.au/mellor/mellor.nsf...A257455001A7C0E

This has me wondering about the true value in the Diesel????

Should I have just gone for a Auto Petrol SLX and saved myself $2,500.

The only big advantage of the Diesel that I can see at present is the shear torque of the Diesel and the driving pleasure it gives... :gitara:

Realisticly I do about 15,000km a year tops.. I will need to keep it a while.

By car buying history is not good for keeping cars for long periods.. Normaly 2-4 years.. But that is due to other circumstances..

Why not just by a Sonata instead and get 8.8l/100km out if it..

I know you guys in the UK pay through the nose for Fuel.. So I hear you say stop complaining... But.. At the end of the day.. The hip pocket is hurting...

All good point's, just remember all our food gets delivered by diesel power so expect the cost of living to go up in bulk too.

Stop complaining :P

Buying a diesel to save fuel costs is probably a silly idea these days

It's great for the torque though! :P

CHB. Thats the way Im looking at it.. More Torque under the right slipper..! :banana:

And it is better than the 13l/100km Territory that we are currently using as a daily driver... (and 13 is on the open road on long runs...!)

Perhaps one day, the goverment will act and reward those driving cleaner Diesel...

I wish! :innocent:

This post has been edited by bdennis: May 28 2008, 05:41 AM

While accepting and wishing that diesel prices should not be as high as they are, it is really only a massive issue now because the (generally) uneducated public have initially gone all gooey over diesel because of its environmental benefits (not counting the particulate problem ...), but most of all .... economy. Or at least, a year ago.

A bit of perspective I think is needed here - why would I, and you, buy a diesel? For me, it's because I like the torque, and the fact the low fuel consumption means I can drive longer without having to refuel as often. And as an aside, that means more opportunities to look for better diesel prices, not that it matters.

The overall extra cost of the diesel (running costs, purchase price, resale etc) is simply a premium to enjoy the two things above. Much the same as paying premium for a VW Golf over a Kia Rio - they both do the same job, but the desire behind it is worth the premium (for some anyway, I think VW's TDi engines are overrated and way behind in technology compared to Hyundai and PSA Peugeot Citroen's diesels, and it shows with the VW sounding like trucks! My opinion only).

So, perspective, perspective, perspective ... diesel, is simply a happy premium. (not sure in a years time of course ... it could be a very UNHAPPY premium !!!)

Irrational Rant follows!!!

As a UK diesel driver I am but one of many wondering about the long term future of my fuel of choice. Googling on the subject some days ago produced an article by a commentator who takes a different perspective to the one in the above article.
See: This Blog
and scroll down to these posts
Wednesday, May 21, 2008
355. BANKS HOARD OIL IN STORAGE TANKS
Monday, May 19, 2008
354. OIL SUPPLY & DEMAND VS. PRICES

This commentator backs his argument with what looks like credible data to support his view that the current escalation in the world price of crude oil and its refined products is down to Hedge Fund Speculators who seem to be trying to drive up prices as far as they will go. As for supply shortages there are none in his view. Come to think of it, I have not seen any reports of any country suffering supply shortages. Anyone heard of queues at the diesel pumps or talk of rationing in diesel starved Asia??. So much for "The Law of Supply and Demand".

In my jaundiced opinion we powerless consumers are just being ripped off by those with the power to drive up prices because our respective governments seem to lack the ability or will to take the difficult decisions and legislate against and or prosecute those business practices in the so called Investment Community. Manipulating a Share Price on the "Stock Exchange" may be a rarely detected crime but is seems that Commodities like Oil are fair game for the Speculators.

End of Rant. I do feel better getting that off my chest. It will not do me or anyone else any good but it just feels better to have had the chance to say what I think. I guess that means that I have now joined the ranks of Internet Ratbags!! :wacko:

Perhaps the addition of LPG blending with Diesel supported for the time being by Government Grants in Australia will have to be considered by us drivers of small diesels too. If the current high prices become permanent and many seem to think they will, the pay back period for such modifications will undoubtedly come down. Someone else on this forum liked to a good site for Oz drivers. See here My reading of the site indicates that at present the major market is for such conversions is Trucks and 4x4s. The 20-25% diesel fuel saving as well as the improvement in emissions could rapidly become economic for "Ordinary Motorists" too. Providing LPG prices stay low. :whistling:

We probably need a socially responsible car manufacturer like Hyundai (Crawl Crawl :innocent: ) to take up the large volume manufacture of the kit so it can become a reasonably priced standard factory fitting.

On the other hand the increase in Gas To Liquid or GTL Diesel production coming over the next few years might have a major impact on world markets... if we consumers are lucky.

Shell seem to be one of the main players at the moment see: this
and this too

Another player is SASOL If you drill down on their web site you will find some incredible presentations about GTL in pdf format.

A number of other GTL projects all over the globe were put on hold because of construction costs a few years back. (I think that included some that SASOL hoped to undertake in the Gulf.) Who knows what the changed environment looks like to the money men now with the current price of oil. The dramatic increase in the price of oil should now make such investments attractive. Perhaps they will dust of their shelved plans and get going. GTL seems a better fuel by far to my inexpert eye. It looks as if the Oil companies like Shell will start by blending GTL with ordinary Diesel. That is already under way in many countries. When the blend gets to 50/50 or better I wonder will it still be possible to blend in LPG or will that combination prove too rich and finish up damaging engines.

Finally a question for the Oz members. My Googling revealed that GTL plants have been proposed for Western Australia and the Northern Territory. Did any of them actually get beyond the planning stage? Blending GTL with ordinary Diesel would help lower the sulphur content of the diesel burnt in Oz. According to the Envio web sites Australia lags behind in this area or is that an out of date bit of information?

This post has been edited by The Bun-yip: May 28 2008, 11:12 AM

:) Hey Shambles your right, i went past my local servo they have diesel @ $1.74.9 per Lt and the sell a 750 bottle of water for $2 :) :P
cheers

OK.

So in the past 48 hours there was a blockade by hauliers of minor roads into London, protesting at the rising fuel costs (they're after a must-use-the-road subsidy like the buses get in the UK).

Not a whimper by the Labour government.

However, our noble chancellor is considering deferring his "2p per litre tax rise" until next year. WHAT FKIN GOOD IS THAT? I ASK

Already taxed at 72%/litre why the FK can't this global rise be offset by a reduction in pump tax in this country? I'll tell you why not. It's because the Labour Govmt.....

Ah shove it. It annoys me too much..

The way I always looked at my purchase wasnt i30 petrol vs i30 diesel - it was more i30 diesel vs my current old VT Commodore. I've always had Commodores, and the promise of using half the fuel that I was swung the next purchase that way instead of yet another Commodore - so its still costing 20 bucks less to fill up and I'm getting a couple of hundred kms more than the VT ever did

Thus, the way I see it, I'm in front! :)

OzSnowman..
I agee with you..
Have always had Ford V8's... and I6's.

I think the best way to look at this is to ignore the premium of Diesel and just count the savings per your comments. In reality the i30 is cheaper than a Commodore or Falcon... Yes we can by a Petrol I30 for less but in reality it is the running costs that are killing us rather than the up front cost. In theory, it is just the same as buying a Petrol car with a Sunroof option.. Similar cost....

Probably sticking my head in the sand, but.. thats life... :57:

Stick with diesel it maybe $2500 premium I will make back in a year easily compared to my v6 19/100km consumption.

Its a good debate even if diesel remains 30c above unleaded Im still in front if it hits 40-50c above unleaded.

Not too mention the extra discount Nrma give me on insurance for driving a greener car.

Why do we have diesel trucks delivering our groceries compared to petrol ?

Simple diesels are more efficient, have more torque and treated nicely will go forever.

Stay with diesels guys and lets put the pressure on governement and oil companies to reduce the price afterall its cheaper to refine.

Understand Shambles, we just need a government that knows how to work and make $ for the country, but all we ever get is sponge's that only know how to you know what :)
Cheers m8.

Hey Bun-yip,

A man that can write a heart felt piece like that would be more than welcome at

www.i30ownersclub.com

and for you, Shambles and eye30 I have even posted a little appropriate humour in the off topic/humour section...

P.S. I agree here in Aus we are still travelling 100kms for between $7 and $9 in our diesel i30's most vehicles with similar performance struggle to travel that far for under $10 in many cases $15 or more....

Rgds,

Dazz

This post has been edited by dazzling_darryl: May 29 2008, 04:26 AM

yep our government sux 70 per cent tax on diesel 20per cent on ordinary passenger vehicles

whatever happened to just 10 per cent gst liars they r

This post has been edited by dannytucker: May 29 2008, 06:01 AM