Diesel differential

John Dundon from Tipperary was driving from Limerick to Cork recently when he noticed something which struck him as puzzling. “For as long as I can remember there has been a price differential between unleaded petrol and diesel fuel and the advantage in diesel’s favour has typically been in the order of five to 10 cent per litre.”

Not any more. He says that in recent days he has seen the price difference virtually evaporate, and now diesel costs just one cent less than petrol. “Is this just another shame-faced attempt to maximise profit margins by the fuel companies or forecourt owners, or does this reflect another change of which I haven’t been aware?”

It is not just out of idle curiosity, he says, as he has only recently bought his first diesel car, after almost 20 years of driving, to save himself a few bob. “I now find the financial savings are rendered insignificant. Indeed, considering the price premium buyers are still forced to pay for diesel-engined cars over the petrol-engined equivalent models, I find this development nothing short of a rip-off.”

We contacted the head of Maxol Ireland, Tom Noonan, to see if he was able to shed light on the narrowing of the price gap. He told us that as diesel has multiple uses - principally as home heating oil and car fuel - demand in Europe during the winter months was significantly greater than in the summer, hence the closing of the price gap between it and petrol. He said that the full wholesale price of diesel was now actually higher than petrol. Last week the wholesale price of diesel (excluding VAT and discounts) was 98.59 cent, while the wholesale price of petrol was 97.39 cent.

While he might not make any savings on the forecourt, Dundon’s diesel car will give him much better fuel economy than a petrol equivalent, although he will need to do more than 10,000 kilometres a year for the next five years to overcome the ridiculous premium car manufactures charge for buying a diesel car. They continue to add this premium - of around five per cent - onto diesel engines because, they claim, the development costs are higher. While that may have been true at one time, it certainly isn’t now, and some car manufacturers such as BMW now charge the same for their diesel and petrol cars, a precedent, it is to be hoped, which will be followed by all car makers in the near future.