Super Bowl Diesel

In addition to a pair of well-matched teams and a sufficient dose of fourth-quarter suspense concerning the outcome, yesterday's Super Bowl was the first in several years to feature an ad meriting comment in an energy blog. The subject of the ad was the new Audi A3 TDI clean diesel car, which was recently named "Green Car of the Year" for 2010. I was intrigued by the ad's tagline of "Green has never felt so right", positioning the car as painlessly green. Having had the opportunity to drive one at the recent Washington Auto Show, I can attest that the A3's environmental credentials come wrapped in a very attractive package, requiring no sacrifice other than the sticker price. Even if the comparison to a variety of intrusive green practices lampooned in reductio ad absurdem fashion may have annoyed some observers, the positive side of the message seemed smart and timely: Diesel cars are available now in appealing models delivering greatly-reduced fuel consumption and emissions, but without requiring major behavioral changes on the part of their owners.

Audi's "Green Police" ad, with a musical riff on Cheap Trick's classically-catchy "Dream Police" tune, was a marked contrast to the 2006 Super Bowl ads for Ford's Escape Hybrid and Toyota's Prius Hybrid, both of which appealed to green values of ecological and inter-generational responsibility. By contrast the A3 ad was consistent with the sharper edge of many others in yesterday's broadcast, which included several ads that pushed the boundaries of good taste. But while the New York Times found it "misguided"--heaven forbid that anyone poke fun at meticulously separating our recyclables and choosing the socially-correct shopping bags and energy-saving light bulbs--the ad showed up in at least one top-10 list and topped the voting on the Wall St. Journal's website as of this morning. Without digging a lot deeper, though, I can't tell if that's because it reached its intended audience with its messages that diesels are back, are much more refined than the soot-spewing diesels of the 1970s, and can now actually be considered green. Perhaps many viewers just thought it was clever, or resonated with its critique of some of the lifestyle changes we've been asked to make for the sake of the environment.

In any case, it's interesting to note that the US market share for light-duty diesel cars has been creeping up gradually, apparently matching or exceeding that of hybrids last year. The folks from Bosch, which supplies much of the high-tech gear for the advanced diesel engines under the hood of the Audi A3 TDI, VW Jetta diesel, and other, mostly European-based diesel models that have appeared in the US--including the awesomely-powerful BMW 335d that I also drove at the car show courtesy of Bosch--mentioned figures indicating that the new diesels beat most hybrids on lifecycle ownership costs, mainly due to higher resale value. (Diesel engines are usually good for hundreds of thousands of miles of use, and they don't require expensive battery pack replacement.) Their most obvious selling point is still fuel economy, with the A3 TDI rated at 30 mpg city/42 mpg highway.

That translates into significantly higher miles per dollar, even with diesel fuel selling for modestly more than regular gasoline. It's worth noting that the current diesel premium over unleaded regular of about $0.13 per gallon works out to about 5%, which is much less than the typical 30% fuel economy benefit for diesel relative to the comparable gasoline-powered model. That differential averaged $0.12/gal. for 2009, a far cry from the $0.57/gal. premium in 2008, when the tail end of the economic bubble pushed diesel up against its supply limits here and globally. However, even when the recovery picks up, we're unlikely to see that differential widen to anything like its former level, because the overhang in global refinery capacity has grown so large, and many of the new refineries and refinery expansions coming onstream, including the one at Marathon's Garyville, Louisiana plant, are focused on maximizing diesel production.

At a time when hybrids are still experiencing growing pains, and the market penetration of battery electric cars (EVs) and alternative fuels like E85 depends to a large extent on nearly non-existent infrastructure for recharging or refueling, diesel has a window of opportunity combining new technology with nearly-ubiquitous infrastructure. That same opportunity led to sales of diesel cars in Europe exceeding those of gasoline cars, until a presumably-temporary dip last year. It remains to be seen whether the same phenomenon will happen here, or if consumers will be content to stick with gasoline or jump directly to electricity. I also remain perplexed that neither Ford nor GM has brought any of its successful European diesel passenger car models to the US as a quick and cost-effective way to comply with the new fuel economy rules.