Development and efficient utilization of our natural energy resources are receiving national attention. One major user of energy is the transportation industry. In 1975, the United States Government enacted the Energy Policy and Conservation Act which has a section aimed at improving automobile efficiency. One approach being considered to reduce passenger car energy demand is the use of diesel engines instead of gasoline engines.This paper presents the results of a study exploring the potential passenger car demand for diesel fuel and the implication of this demand on the petroleum industry processing requirements. In addition, an evaluation of the relative economy, performance and emissions of diesel-powered cars versus gasoline-powered cars is presented. An estimate of the net energy utilization in terms of both miles traveled per barrel of crude and crude savings for various degrees of diesel engine penetration in the automobile market is given. For example, if in the distant future diesels comprise 35-40% of the car population, there could be a 9-10% increase in passenger car mileage at constant crude oil consumption or a 3½-4% reduction in crude oil usage at constant passenger car mileage. It is also noted that the refining industry will incur costs associated with the shift to processing larger quantities of diesel fuel and that this may result in a reduction in the current cost advantage of diesel fuel compared to gasoline.