Fleet diesel cars are becoming casualties in someone else’s war

SHOCK HORROR tabloid headlines tend to sacrifice accuracy for impact. But this pre-Christmas effort by the tirelessly shouty Daily Express was uncharacteristically specific for once:

DEATH OF DIESEL CARS - The diesel vehicles that have been ditched in 2018. (Express. 23 December 2018)

Your average sub-editor would have left it at ‘DEATH OF DIESEL’ but that wouldn’t be true. For once, the Express was being honest about the fact that the relentless media attacks on diesel are not about trucks, vans, buses and trains – just cars.

Specifically, they are aimed at private diesel cars whose owners could get around in a petrol model just as easily (if not quite as cheaply).

This media war on diesel cars is Europe-wide. You’ll get over 5,000 hits from various countries if you Google news sites for ‘death of diesel’.

All of this is linked to the fact that Europe is a complete outlier in fuel terms. It’s the only major market in the world whose dominant car fuel is diesel.

Houston, we have a problem

The world economy runs on diesel. Britain’s economy certainly does. In 2017, UK road users consumed more than double the quantity of diesel than of petrol: 24 million tonnes of diesel to 11.75mt of petrol.

Nothing can touch diesel as a business fuel. For a given quantity, it offers more mileage and more payload headroom than any other. It’s typically 20% cheaper on cost-per-mile than petrol, despite its higher pump price. Diesels emit less CO2 per mile than petrol or LPG. And, believe it or not, barely 60% more than a pure EV on a well-to-wheel basis .

Unfortunately, the world has reached the point where there is not enough diesel to go round. Production of conventional crude oil – the stuff that spouted from Texan wells in films like Giant – peaked globally about 10 years ago.

Since then, the supply shortfall has been filled mainly by fracking and tar sands. Neither of those methods produce grades of oil that refiners are currently geared-up to turn into diesel.

To make matters worse, ocean shipping will switch from bunker fuel to low-sulphur diesel from 2020. Unless the supply goes up or total demand comes down, the price of diesel will increase to balance the market. That will affect the cost of nearly everything in the global economy.

Diesel supply won’t increase much, though. What incentive is there for a refinery to expensively refit its plant when many governments have sworn to end all fossil fuel car sales by 2040?

War on the diesel car

Now look again at Europe with its outsized taste for private diesel cars. To an economic planner, that looks like a convenient source of fairly quickly-replaceable diesel demand to take the pressure off more economically beneficial uses like trucking and shipping.

So there’s been a two-pronged attack on diesel cars.

  1. The media demonises them by, among other things, egregiously misrepresenting air quality and health data.

  2. Governments ‘respond’ with (revenue-boosting, of course) tax penalties and air quality charge zones to save lives.

Joe Public gets the message and starts to give diesels the kind of shunning a devout Amish community would be proud of.

Forgetting fleet diesel

This propaganda campaign is intended entirely at private motorists. It should be obvious to policymakers that, for car fleet operators, diesel is as indispensable in many workhorse car roles as it is for commercial vehicles.

Trouble begins when the people in charge start believing their own propaganda. So now we have the UK government ever more enthusiastically hammering away at diesel company cars as if petrol is always a viable alternative, which it isn’t.

The consequences are easy to predict. Higher costs for UK business, whether from steeper diesel taxes and charges or going over to petrol or prematurely trying to electrify car fleets. More, not less, pollution as drivers opt out of company cars into older, dirtier diesels or high-CO2 petrol alternatives.

It’s as if all the civil servants in Whitehall who understood the checks and balances involved in taxing the UK car and fleet markets have gone missing. In fact they probably have: seconded to the growing army of Brexit administrators.

It’s a bit early to peg this as an existential threat to the car fleet market. But given the utter cluelessness with which the government has handled Brexit, it isn’t hard to believe they would be clumsy enough to inflict lasting damage on the fleet industry while aiming at quite another sector of the car market.