If you want to upgrade to a more fuel efficient car, why not go all out and get one that gets you up to 50 miles per gallon?
Now might be the time thanks to the government’s Cash for Clunkers program.
Formally known as the Car Allowance Rebate System, the incentive could give you as much as $4,500 to help offset the price of a new car. But if you’re looking to use the incentive to make up for the premium you’ll have to pay for a real fuel-sipper, are you likely to buy a hybrid car like the Toyota (Stock Quote: TM) Prius, or a diesel vehicle, which also stretches your gas money far?
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The Perks of Diesel
Diesel gets you more for your money than gas, especially now since prices of both are about $2.55 as of the beginning of August, according to the U.S. Energy Information Administration. (A year ago, a gallon of diesel averaged about $4.50 a gallon while retail gasoline was about $3.94 a gallon.)
One reason for the usual price difference is that today’s diesel is much cleaner than diesel used decades ago.
“Nearly all of the sulfur is now removed from on-road diesel,” says Tom Kloza, Chief Oil Analyst at the Oil Price Information Service. While this process could make diesel cost more than gas, the difference may be tamped by demand for the fuel, which has many other uses including jet fueling and home heating.
“A $2.75 a gallon diesel price isn’t the same as a $2.75 per gallon gasoline price, usage-wise,” says Tom Kloza, Chief Oil Analyst at the Oil Price Information Service. With diesel, “You get more bang for your BTU buck,” he says.
It’s unclear whether diesel prices will stay relatively low, however.
“Diesel prices are likely to be volatile,” predicts John Wolkonowicz, auto analyst at research firm IHS Global Insight. Demand is currently high, but there are other ways to achieve or exceed the fuel efficiency of a diesel car with gasoline, he adds.
