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Diesel Now Costs the Same as Regular Gasoline

Don't look now, but the business case for diesel passenger cars has gotten a whole lot better in the last year, as diesel has fallen to the same price as regular gasoline.

The fact that diesel fuel was more expensive than gasoline was an argument against switching to diesel, even though diesels get about 25 to 30 percent better miles per gallon than the same size gasoline engine.

A year ago, when fuel prices were close to their all-time highs for the U.S. market, diesel was about 67 cents per gallon more expensive than regular gas, according to the AAA Daily Fuel Gauge Report.

With diesel now at the same price as regular gas, diesel owners can start saving money on fuel costs right away. For instance, 12,000 miles of highway driving in a diesel that gets 36 mpg would cost about $337 less than the same miles in a gasoline-powered car that gets 26 mpg.

However, diesel owners still don't start saving money right away overall. That's because diesels are more expensive to build, and the German automakers that offer diesels charge a premium for diesel models.

For instance, the sticker price for the Mercedes-Benz R320 BlueTec diesel is $1,500 higher than the closest gasoline model, the R350 4Matic. For some cars, like the BMW 335d, the premium for the diesel model is a lot higher. Starting price for the BMW 335d diesel is $3,600 higher than the gasoline-powered BMW 335i.

Diesels account for a majority of sales in some European markets, and the European automakers are mystified by the fact that Americans are not stampeding to diesel.

Using cleaner diesel fuel, modern diesels are cleaner-burning, more powerful, and less smelly and smoky than the passenger-car diesels that were popular in the United States from the late 1970s to the mid-1980s.

Audi, BMW, Mercedes-Benz and Volkswagen are all offering additional diesel models, in part to play catch-up with gasoline-electric hybrids like the Toyota Prius.

Until recently, stricter emissions rules in several states, including California and New York, made it impossible to sell diesels in those states. Besides better-performing diesel engines, what's changed is that cleaner diesel fuel became mandatory in the United States in 2006. Improved emissions-control technology also started coming on line last year.

With those changes, it's now possible to offer diesels in all 50 states. What's debatable is whether Americans really want them.

Chart: Energy Information Administration