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A number of different and perhaps conflicting claims have been made about the fuel-economy benefits of Diesel-fueled automobiles versus their gasoline-fueled counterparts. While a “traditional” figure of a 25 percent fuel-economy gain with Diesels is often used, this figure has varied due to differences in vehicle performance, driving conditions, fuel Btu content, and advances In engine design (particularly in spark-ignition engines). This paper looks at fuel economy, in the broad sense of the term, from the consumer's perspective. The analysis is based on EPA-measured fuel economy in model year 1980, actual on-road fuel economy for 1975-1980 automobiles, and recent fuel price data for gasoline and Diesel fuel. Comparisons of gasoline and Diesel fuel economy that account for these three variables are presented. Also considered is the way that gasoline and Diesel fuel economy comparisons may change in the future with changes in fuel prices, emission standards, and engine design.

Given that a transportation fuel transition away from oil will occur, this paper explores fuel selection and government involvement. Arguments are made for choosing a petroleum replacement now, establishing methanol as the fuel of choice, planning for the transition and involving government in market readiness. Mandatory introduction of methanol compatible fuel vehicles and a national fuel distribution system, so that the marketplace can accommodate methanol when it is economically viable, is proposed. The cost of this approach is comparable to that of other energy activities designed to deal with transportation's oil dependence. This approach is consistent with a free market based energy policy and offers the opportunity to limit petroleum price increases.