Diesel cars to drive future of US refinery mix?

Implications: Fuel efficient diesel engines have the potential to restructure the US auto industry.  Current US refinery capacity for diesel is tight during seasonal heating oil demand peaks.  For diesels to realize their potential share of the US auto market increased fuel capacity must be secured.

Analysis: Due to incentivized fuel tax systems the European new car market is >50% diesel today.  As Detroit strains to meet pending 35 mpg CAFE standards, looming CO2 emission caps, and survive $4 per gallon gas shock the prospects for diesels here has never been brighter.  Expectations from JD Powers and others are for 12% - 15% diesel market share by 2012-2015.   Major OEMs including GM, Toyota, Nissan, Honda, Mercedes, Audi/VW, and Chrysler/Jeep have all committed to new diesel platform launches in the next 12-24 months.   since diesels enjoy a 20% - 30% efficiency advantage vs. gasoline engines the prospects for reduced fuel [and crude oil] consumption are real.  The devil is in the details though - refinery capacity is tilted in favor of gasoline and would need to be rebalanced to meet diesel demand.

Diesel and #2 fuel oil for home heating are the same distillate, diesel fuel is typically same or less per gallon vs. gas in summertime but rises above the mogas benchmark in wintertime due to seasonal demand spikes.

Ultra Low Sulfur Diesel for on-road engines would need more hydrocracking catalyst capacity [vs. conventional FCC mogas plants] but would realize a net reduction in total gallon demand due to higher fuel economy.  The market may be in a Catch-22 for several years until the balance between vehicle choice, fuel costs, and refinery capacity is reached.