There are several reasons for high diesel costs. Crude oil accounts for about half the per-gallon cost, so the recent global price spike contributes heavily. The Feds tax diesel $0.06/gallon higher than gasoline, which is only fair considering the greater wear and tear heavy diesel trucks exact on our roads. The long-overdue transition to low-sulfur diesel fuel in this country has increased production and distribution costs. But the longer-term problem is increasing worldwide demand. China and Europe are straining already tight global refining capacity, and the infrastructure has limited flexibility to shift between gasoline and diesel production. That's why Europe exports surplus gasoline to the U.S. and we export diesel to Europe. Changing the infrastructure to grossly increase diesel production per barrel would require switching from the well-established fluidized-cracking and coking processes that yield today's mix of hydrocarbon products to more gasification and steam reformation of hydrogen for use in diesel production. Why don't the fat-cat oil barons simply spend some of their obscene profits on new refineries? Because nobody wants one in his own backyard, so obtaining permission to build is difficult, even with Big Oil's lobbying budget. This means radically increasing the diesel fleet will drive near-term diesel costs even higher.
A pilot plant producing SunDiesel from wood chips is in operation.
Ah, but can't we just make up the difference with biodiesel? According to the National Biodiesel Board's Jennifer Weaver, the U.S. currently has capacity to produce two billion gallons annually-enough to satisfy the renewable fuels requirement in the recent Energy Bill. Last year's production was 500 million gallons (nearly twice that of 2006), 80 percent of which came from soybeans. She also asserts that soy fuels don't stress the food supply the way corn ethanol does because the meal extracted from milling the beans still enters the food chain, and that if not for biodiesel production, much of the oil would go to waste. But biodiesel can account for only 20 percent of diesel use because it needs to be blended with petro-diesel in that concentration or less, due to its different lubricity, cetane rating, and oxidation properties. Above that, driveability problems, especially in cold weather, and fuel-aging issues crop up (it breaks down faster than petro-diesel with age or heating).
Next-generation renewable diesel fuels could change that (see "The Biodiesel Horizon" sidebar). Widely varying fuel quality has also stunted biodiesel's sales growth. General Motors markets a biodiesel fleet-use package that hardens the entire fuel system to withstand 20-percent biodiesel (B20 otherwise causes seals to swell and leak), and according to Bob Straub, GM's diesel fuel-systems specialist, many engine problems in the field have been attributable to poor-quality biodiesel sold through mainstream retailers (not fry-oil home-brewers). As you read this, standards defining the physical characteristics of B20 are (it's hoped) being agreed upon, and producers and marketers are earning BQ9000 certification for adhering to fuel-quality standards. This should enable manufacturers to design and certify vehicles to run on B20, earning themselves CAFE credits and (presumably) increasing biodiesel demand. But beware, strong demand in some regions has led to rainforest clear-cutting to grow oil-rich palm crops-an unintended consequence of the best Green intentions.
So what's our fearless prediction for diesel's prospects in this country? Technology will keep pace with emissions regulation. Big pickups and SUVs with serious work to do will be powered by diesels. When they're loaded and straining, diesels slaughter gasoline in terms of efficiency, so users in that category will certainly enjoy lower operating costs. But light-duty spark-ignition combustion efficiency will improve faster than diesel-fuel prices will fall, so economics will make gasoline/E85 and hybrid drivetrains more attractive in the mainstream passenger-car realm. But we're rooting for algae biofuels and next-gen renewable diesel to prove us wrong.