DATE=4/7/02

TYPE=BACKGROUND REPORT

TITLE=AMERICA & THE DIESEL, PART-TWO

NUMBER=5-51384

BYLINE=JOHN BIRCHARD

DATELINE=WASHINGTON

INTERNET=YES

CONTENT=

INTRO: U-S sales of diesel-powered cars last year accounted for less than one-quarter of one-percent of total new car sales. Contrast that with Europe, where more than one-third of all new cars sold are diesel-powered. V-O-A's Automotive Reporter John Birchard explores reasons for the diesel disparity.

TEXT: The difference boils down to social policy, and the use of taxes to carry out that policy. European governments, in an effort to reduce dependence on imported oil, have long used high taxes on gasoline and lower taxes on diesel fuel to promote use of the more efficient diesel engine.

The American Petroleum Institute is a trade association representing 400-companies active in the U-S oil industry. Institute spokesman Ed Murphy cites an example of how the European policy works in the marketplace.

/// MURPHY ACT #1 ///

The price of diesel fuel in France is roughly two-thirds of the price of gasoline. Whereas in the United States, they are roughly the same or even slightly higher, diesel being slightly higher than gasoline.

/// END ACT ///

The executive director of engine engineering at General Motors Power Train, Otto Willembockel, describes a pact between automakers and European governments.

/// WILLEMBOCKEL ACT #1 ///

The automotive manufacturers had to commit to a reduction in C-O-two (carbon dioxide) emissions, or let us say, reduction in fuel consumption or improvement in fuel economy. And they said, "Yes, we commit to this if the government guarantees that they will not put up hurdles that the diesel could not make."

/// END ACT ///

So diesels have the official "seal of approval" in Europe. Automakers have an incentive to develop diesel technology and consumers have a financial incentive to buy them.

In America, not only is it at least as expensive to operate a diesel as a gasoline-powered car, but government agencies are imposing strict pollution emission regulations on them, a disincentive for automakers to spend money for development. As long as U-S gasoline is relatively cheap, there is no push for diesels.

Also, automakers cite present and future U-S pollution emission requirements as blocking the way for new diesels here. G-M's Otto Willembockel explains:

/// WILLEMBOCKEL #2 ///

If nobody sees that they can manage this, and you also have to manage this after 2010, I think nobody takes the risk to invest in diesel engine manufacture for passenger cars.

/// END ACT ///

But an official at the Environmental Protection Agency, Margo Oge (PRON: "OH-gay"), Director of the Office of Transportation and Air Quality says diesels do have a future here.

/// OGE ACT #1 ///

We went to Europe, Japan, and we have been visiting companies in this country. And, as a result of those visits, we have identified three car companies that have come a long way in meeting those standards. Actually, one of those companies, as you probably know, is Toyota, that has a car in our lab for testing.

/// END ACT ///

With low-sulfur fuel the car companies may be able to meet the government pollution requirements with new technology. But, so long as gasoline is relatively cheap and plentiful, most consumers will see no good reason to depart from the familiar and proven gasoline-powered car. For Americans, diesels are for buses and big trucks, not for the cars most drive. (SIGNED)

NEB/JJB/RAE