Wednesday, March 09, 2005

The Issue with Diesel

Ford is stating the current issue most American market auto manufacturers have with introducing diesels en masse in the US, in this article, by Autoweek. The article doesn't make things too clear but essentially, if Ford were to make cars that used the current diesel fuel, they would not be able to sell those cars in several states, including New York and California. Though diesel engines are dramatically more fuel efficient then gasoline engines, they pollute a great deal more. New diesel fuel which when used will pollute at allowable levels for all 50 states won't be introduced at the earliest until 2006. So until then, no diesel cars from most of the manufacturers.

Every car company needs to do what it can to change the fuel infrastructure of this country to accomodate as fast as possible this new clean diesel. And they need to make cars with engines that can handle said fuel. The price of gasoline will never go below a nation-wide average of two dollars for the indefinite future. That means people are going to be looking to downsize. If a clever company had diesel cars available, they could sell these for a premium, as they would be using a less commonly available fuel, AND, they would be larger in size since they got better fuel economy. The less spent on fuel, the more people will want to buy larger cars.

I really think Chrysler stands to benefit from increased diesel usage more than most companies. Why? Because of Mercedes' specializing in diesel engines. Quite frankly I would be buying DCX stock as much as possible and holding on to it for about three years once the next big fuel crisis comes. And it will come.

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