Does buying a diesel car still make sense?
Updated on September 22 2023
By Melvin Magadia for Automart.PH
METRO MANILA, – If you drive a diesel SUV, you might be reeling from the price of diesel fuel, which is now more expensive than gasoline.
This is especially true after the recent oil price increases, when diesel went up by as much as P6.55 a liter in a week.
It used to be the case that you bought a diesel car so that you could save money from better fuel consumption and cheaper fuel. But with diesel now costing more than super unleaded, you might be having second thoughts.
Let’s look at why a gasoline car might be a better buy.
Strong demand for diesel in Asia
As more economies reopened in Asia, there was a huge demand for diesel fuel, especially in the manufacturing, shipping and mining sectors.
Furthermore, diesel supply in other parts of the world was already running low even before the conflict between Russia and Ukraine erupted. The situation took a turn for the worse when oil companies like BP and Shell stopped trading Russian crude and ceased their operations in Russia because of widespread criticism in Europe.
In other regions, demand for diesel in Europe remained high, especially in winter time as it is used in residential heating.
Diesel supply and demand
Oil refineries are trying to ramp up their production of diesel fuel to meet demand.
However, the supply of crude oil worldwide is tight and increasing production will only make matters worse. Adding pressure on demand for crude oil will only lead to higher prices.
Another possible solution to solving the supply-demand quandary is to ration diesel supply. However, this would only mean that the affected industries and sectors would have to reduce their production, which adds more pressure on diesel prices and increases the prices of goods and services.
Contributing to the high cost of diesel fuel compared to gasoline is the excise tax being imposed in the Philippines and other countries.
Currently, the excise tax for diesel fuel locally is P6 per liter. The Tax Reform for Acceleration and Inclusion or TRAIN Law increased the excise tax on fuel in three tranches from 2018 to 2020.
To alleviate the plight of drivers, many are recommending the suspension of fuel excise tax. However, the Department of Finance said that the suspension could result in as much as P131.4 billion worth of revenue losses, which could potentially hamper the country’s recovery from the COVID-19 pandemic.
Is going gasoline better?
With diesel fuel more expensive than gasoline nowadays, you might be asking yourself if you need to switch to a gasoline fuel-powered car.
Let’s compare using a Hyundai Accent, which comes in either a 1.4-liter gasoline engine or a 1.6-liter diesel engine.
The former can deliver 9 kilometers a liter in the city, while the latter can do up to 11 kilometers per liter. For highway driving, the Accent’s gasoline engine can deliver up to 16 km/l, as compared to 20 km/l for its diesel counterpart.
Despite the big difference in fuel consumption, the savings that can be had with diesel are lost because of the price increases.
In addition, the 1.6-liter diesel engine is more expensive to maintain than the 1.4-liter gasoline engine Accent. This is because modern turbodiesels have complex electronics and turbochargers, along with requiring more frequent oil changes than gas engines.
Pivot from diesel
In fact, other countries are starting to move away from diesel engines altogether. There is now a move from the UK, where diesel and gasoline cost roughly the same, to stop selling new diesel cars from 2030 under plans announced by Prime Minister Boris Johnson.
A recent survey of 1,000 UK firms found that 62 percent of large businesses, with between 250 and 499 staff, are considering phasing out their diesel vehicles, compared to 33 percent among small firms with less than 10 employees.
In fact, manufacturers like Porsche, Toyota and Volvo have already starting removing diesel vehicles from their vehicle lineups. The market for diesel is slowly shrinking.
A diesel vehicle can become worthwhile if you drive long distances and reach up to more than 20,000 kilometers a year. But if you only do short distances, especially at current prices, a gasoline car might be better for you.
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Automart.PH Senior Content Creator VJ Bacungan contributed to this story.