Ask an expert

By my calculations I am paying $2.37 for litre of diesel.

I have recently purchased a small diesel vehicle specifically for economy reasons.

Now tell me if I am wrong, but if I drive 1000 km, and consume 50litres of diesel at $ 1.69, I will have spent $84.50.

Add the Road User Charges (RUC) of $34, and the total becomes $118.50.

So, for my 50 litres, I paid $118.50, which equates to $2.37 per litre.

Where is the justification in that, using a environmentally friendly car?

Also, if the AA fights for GST removal on petrol, how can I, with a diesel, profit from that?

The impact of such a move will always go to petrol.

Johan

From the "Ask Jack" archives - 14 December 2009

Before we get onto your calculations and comparisons with petrol, I must say you have raised a very interesting point and it highlights the need for motorists to clearly identify their needs before jumping into diesel powered vehicles.

There are a couple of key points when considering diesel, they are:

- How many kilometres are estimated to be travelled in one year. The average is 14,000km's but you need to be doing above the average in many cases to make the switch worthwhile. The more kilometres travelled the bigger the savings because a diesel vehicle will go further on a litre of fuel in comparison to petrol and the price difference starts to have a significant effect.
- The cost of the diesel vehicle in relation to the petrol. If you are paying several thousand dollars more for a diesel, it is going to take a certain amount of time (depending on the distances travelled) to recover that cost.
- The servicing costs need to be studied. For an older diesel the recommended servicing schedule can be as low as 6 months or 7,500km's whichever occurs first. The new diesels have the same service intervals as petrol in many cases (12 months or 15,000km's) especially if they are driven in similar environments. While the service intervals may be the same for the newer diesels the costs of those services may be slightly higher in comparison to a petrol.
- Ongoing maintenance can be an issue especially with older diesels, and it would not take long to see the fuel savings evaporate away with an expensive repair bill.
- Many of the new diesel cars are manual only, which can reduce their appeal for many.
- Diesel engines can be very noisy.

Now working on your calculations
I can understand your calculations however you need to remember the extra distance you can travel on a litre of diesel in relation to petrol.

For example and using the current AA running costs calculations:

A petrol vehicle using an average of 6.48 litres per 100km and travelling 14,000km's per year.
Total litres used = 906
Petrol @ $2.01 per litre = $1821
Cents per km = 13

A diesel vehicle using an average of 4.3 litre per 100 km and travelling 14,000km's per year.
Total litres used = 602
Diesel @ $1.74 per litre = $1047
Add RUC charges $450 (includes admin charges) = $1497
Cents per km = 10.7
The difference between the two fuels in relation to cents per km is 2.3 cents

Over 14,000 km's that equates to a saving of $322 over 12 months.

This dollar value increases when the fuel consumption figures between petrol and diesel grows larger (more noticeable for bigger cars with larger engines) or the distance travelled in one year is higher than the average.

The NZAA has campaigned for the government to review the RUC charges especially for smaller vehicles, and we expect some positive changes later this year.

In relation to the recent AA comments on the GST removal, this only related to the GST charged on the excise (a tax on a tax), which amounts to 5.6 cents a litre.