Diesel has less time left

Joaquín Robles is a Bachelor in Business Science, with a specialization in Private Banking and Financial Counseling by the I.E.B. He is also an Account Manager at XTB

In recent days, we were surprised by the news on the diesel-powered vehicles ban as of 2025 in Paris, Athens, Mexico City, and −at least initially− Madrid, although the mayor subsequently said it was not official. A great number of countries are expected to join this initiative, given that it has been evidenced in recent months that diesel is not cleaner than gasoline. For many years, big urban centers have producing pollution levels exceeding World Health Organization’s recommendations; some places even surpass it by 80 percent.

Besides damaging air quality consumed by inhabitants of big cities, the combustion of this fuel generates greenhouse gases favoring climate change. A diesel-fueled vehicle is able to consume four times more fuel than a gasoline-fueled vehicle. Indeed, major automotive brands are starting reducing their supply of diesel engines in urban models. The recent scandal involving German automaker Volkswagen, where the company cheated on real CO2 emissions of this type of engines, speeded up intentions of reducing the use of this kind of fuel gradually.

The process of replacing diesel-powered vehicles with gasoline-powered, hybrid or electric vehicles will take several years, as the proportion of automobiles in big European cities is above 60 percent in favor of diesel. However, in recent years, the evolution of highly efficient gasoline-fueled engines, along with equal prices of both fuels, has made diesel less attractive.

The decline in diesel demand should not cause a great impact on oil prices in the short time, as this situation could only produce an increase in gasoline prices. Oil has experienced the greatest annual rise since 2009, with prices expected to stabilize at $50-$60 per barrel this year. Despite the sale of electric cars are forecast to seen a great growth in the upcoming years, they are not sufficiently competitive yet as to make consumers choose them without assuming extra charges.

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