Gas vs. Diesel
May 2008, Work Truck - Feature
The price jump in new diesel engines, resulting from stricter 2007 federal emissions requirements, has caused fleet managers to take a closer look at whether gas or diesel is best for fleet.
On one hand, the diesel engine costs $7,000-$10,000 or more upfront (compared to gas), depending on truck class and manufacturer. This clearly makes the gas engine price more appealing.
On the other hand, diesels offer better fuel economy and greater longevity and durability. This creates potential for lower long-term operational costs, depending on how many miles and/or years the vehicles are run.
Therefore, when it comes to the gas-versus-diesel question, there’s no obvious, one-size-fits-all answer. How do you evaluate whether gas or diesel is better for your trucks? Here are five factors to guide the decision.
1. Projected Annual Miles
As a general rule of thumb, if you plan to run the vehicle 25,000 miles or less per year, gas may be the more economical option. However, conduct a fuel economy analysis to see if this is true for your specific situation.
For example, you’re considering acquiring ¾-ton pickups and deciding between gas and diesel. On one hand, you’re fully aware the diesel engine can offer as much as 30-percent better fuel economy than gas. On the other hand, the diesel costs about $8,000 more up-front. Will you operate the truck in a way that will recoup the higher initial cost for diesel and realize a savings over the lifetime of the vehicle?
A helpful way to determine the answer is to build a spreadsheet. This allows you to play with different assumptions to see how they affect the overall calculations.
Here are assumptions to compile:
- Annual miles. How many miles per year will the vehicle be operated?
- Average fuel economy. On trucks over 8,500-lbs. gross vehicle weight rating (GVWR), you will not find published Environmental Protection Agency (EPA) fuel economy ratings. Your truck manufacturer’s rep should provide estimated numbers to work with. You can also contact industry peers who are running similar-type trucks.
- Price per gallon. These numbers will certainly change, but as a starting point, use current prices for both gas and diesel. A worst-case scenario can be detailed by putting in higher prices to see how they affect the calculations.
- Expected lifecycle. How many months do you plan to keep the truck? The longer you operate the trucks, the advantage trends to diesel. The shorter the period, the greater advantage shifts toward gas. This trending helps determine the lifetime cost advantage or disadvantage of diesel, depending on how long you intend to keep the vehicle.
- Diesel price difference. This number ranges from $7,000-$10,000 or more depending on truck size and manufacturer.
Go back to the ¾-ton pickup truck example with these assumptions:
- 15,000 annual miles.
- Gas mpg: 11; Diesel mpg: 16.
- Gas: $3.15/gal.; diesel: $3.40/gal.
- Expected service life: 60 months.
- $8,000 higher initial price for diesel.
Based on these assumptions, you’ll pay nearly $2,500 more for the diesel option than gas over the 60 months in service. In this scenario, it would actually take approximately 87 months to recoup the higher cost of the diesel engine.
What happens if the annual mileage was changed to 25,000? With all other factors equal in this example, the investment in diesel is recouped within 52 months, creating a savings of approximately $1,200 with the diesel.
Play with different assumptions and determine what represents the most likely real-world scenario for you.
2. Trailer Requirements
Will you need to pull a trailer? If so, what will the trailer haul? How much is the total weight of the trailer and its payload?
These questions highlight the limitation of fuel economy analysis alone as the determining factor of whether to go gas or diesel. Here’s why.
Consider the ¾-ton pickup example again. According to a fuel economy analysis, if the trucks will run 15,000 miles or less per year for a total of five years, gas is the more economical option.
The issue is this: Suppose the trucks must be capable of pulling a trailer with a total weight (including trailer and its payload) of 14,000 lbs. With most truck manufacturers, the maximum trailer rating with a gas engine ranges from 10,000 to 12,000 lbs. In comparison, ¾-ton pickups with the diesel engine offer trailering capacities as high as 16,000 lbs. or more. (To determine accurate max trailer ratings, consult your manufacturer’s rep or fleet advisor.)
The conclusion: Diesel is the best option for trailered trucks, regardless of annual miles. Assess what your situation requires.