Does the elevated price of diesel tilt economic business cases in favournof rail?

[ExeBlueBird27]

Apologies if this is too simplistic, happy to be educated on this issue.

When a business case is done for a reopening, new line or new electrification infrastructure is a average diesel price built in to the calculations?

And if so, does the current higher price mean that any of these business cost ratio's are now more economically viable?

 

[Dr Hoo]

For a re-opening or new line it is worth noting that higher energy costs will give a twist to construction inflation and make the project more expensive, long before any benefits show through.

 

[DarloRich]

When a business case is done for a reopening, new line or new electrification infrastructure is a average diesel price built in to the calculations?

surely in the grand scheme the current price of fuel is simply transient.

 

[zwk500]

Apologies if this is too simplistic, happy to be educated on this issue.

When a business case is done for a reopening, new line or new electrification infrastructure is a average diesel price built in to the calculations?

In short, yes. There are different costs of fuel and averaged fuel usage rates for diesel vs electric.

And if so, does the current higher price mean that any of these business cost ratio's are now more economically viable?

the values used in business cases are part of the DfT's Transport Appraisal Guidance databooks and generally are issued annually, so short-term fluctuations don't affect things too much.

As both electricity and diesel costs have increased in the UK, nothing's going to have a better BCR. In order to make a scheme more economically viable, you need Benefits to rise more than costs, or costs to fall more than benefits. If you're really really lucky you'll have both at the same time with benefits rising and costs falling.

Fuel is a component of operating costs, so rising diesel price isn't going to help a BCR gain approval.

 

[Kingston Dan]

surely in the grand scheme the current price of fuel is simply transient.

However, moving people and things to electrified railways should long term give more certainty over energy costs as we switch to renewables.

 

[JKF]

surely in the grand scheme the current price of fuel is simply transient.

I suspect it will remain high for some time. Significant damage has been done to infrastructure, some of which will take years to fix. Refineries in Russia are also being destroyed which also has some effect on the global market.

Plus also once people have got used to higher prices the basic principles of capitalism will kick in (sell something for as high as you can get away with) and prices won’t retreat significantly.

 

[InTheEastMids]

DfT's Transport Appraisal Guidance databooks

TAG Data is not top secret, it's viewable here (link to the UK Govt TAG data book)

TAG data book

Historical and reference information on all the appraisal and modelling values referred to in the transport analysis guidance (TAG).

www.gov.uk

Future costs that transport scheme planners use will for fuel/electricity prices for road and rail are in table A1.3.7 in the spreadsheet linked from the webpage above.

surely in the grand scheme the current price of fuel is simply transient.

You are correct, the base data in WebTAG contains a single future value for each year. Road and rail diesel resource costs settle to a nice, stable level after 2030, which of course is absolute guff as history shows relatively regular energy price shocks (down as well as up) since at least the 1970s. We've had 3 in the 2020s! (Covid 2020, Ukraine 2022 and Iran this year)

So this potential volatility, if it's considered at all, is being done within the model(s) for the scheme.

It's pretty obvious that energy price shocks will continue to happen, and this should remind us that the kind of models people build using TAG or any other data are tools to aid thinking and judgement. Unfortunately, senior leaders get tempted to use them as a substitute for thinking and judgement and trot out the modelled BCR or whatever as "the answer" - i.e. they are outsourcing their decision-making to a spreadsheet, which is not what you really should pay people the big bucks for.

 

[zwk500]

TAG Data is not top secret, it's viewable here (link to the UK Govt TAG data book)

I didn't say it was secret, to be fair. Apologies for not providing the links.

 

[renegademaster]

Are most brand new buses not electric now anyway?

 

[fandroid]

It may well improve the viability of rail freight, even for diesel hauled trains. The impact of fuel cost per tonne moved must be a lot smaller for rail than it is for road transport.

 

[sh24]

However, moving people and things to electrified railways should long term give more certainty over energy costs as we switch to renewables.

Not really when our grid, for the foreseeable future, will rely on expensive gas to balance supply and demand. Wind doesn't blow all the time, the sun doesn't shine, waves don't always roll and battery storage schemes are at very early stages.

The UK doesn't have energy costs 8x the US for nothing...

 

[Bald Rick]

The UK doesn't have energy costs 8x the US for nothing...

Indeed it doesn’t. US electricity costs about 30% less than in the UK.

Gas is a different matter, but it isn’t 8 times more.

== Doublepost prevention - post automatically merged: 24 Sep 2026 ==

Not really when our grid, for the foreseeable future, will rely on expensive gas to balance supply and demand. Wind doesn't blow all the time, the sun doesn't shine, waves don't always roll and battery storage schemes are at very early stages.

Except this isn’t true either.

Battery storage schemes are well advanced, with well over 15GWh at Grid / DNO level in service, more than that in construction with delivery in the next 18months, and yet more ‘behind the meter’, with large quantities being commissioned routinely. 1GWh came online last month at one site in Lesmahagow alone. Within the next month or two Ofgem will announce the results for the Long Duration Energy Storage (LDES) cap and floor mechanism auction, with 3 pumped storage projects expected to proceed with a combined capacity of 100GWh, due to commission within the next 5-7 years. Added to existing Pumped storage, and other LDES projects in this allocation, we will have around 80GWh of electricity storage by the end of 2028, and 250GWh 5 years later.

It is reasonable to assume that we will go gas free for a period of time in the next 6 months, and possibly a whole day or two in late Spring. By 2033, it will be weeks at a time. That, to me, is well inside the horizon of the forseeable future.

 

[sh24]

Point taken on battery, I'm not close to that. Sounds encouraging! I'd be delighted if renewables were going to bring down my businesses power costs now but given where pricing has rocketed to this winter....

I do disagree on the power costs for industrial use.. I did some work on this earlier in the year and electricity is 3-4 times higher in the UK and gas can be anywhere between 6 and 9 depending on season and location. Will dig out the references.

 

[Bald Rick]

Point taken on battery, I'm not close to that. Sounds encouraging! I'd be delighted if renewables were going to bring down my businesses power costs now but given where pricing has rocketed to this winter....

Yep this winter is tight in europe because of our orange colonial cousin’s adventure in Iran. One hopes that os transient for this year only. But within a couple of years, it will be increasingyl irrelevant for electricity prices. (As is now the case in Spain).

 

[trebor79]

Yep this winter is tight in europe because of our orange colonial cousin’s adventure in Iran. One hopes that os transient for this year only. But within a couple of years, it will be increasingyl irrelevant for electricity prices. (As is now the case in Spain).

I think gas and oil stays expensive until some time after he leaves the White House. He's created a huge mess (yoooge, the biggest ever) and there's no way for him to clean it up without being the looser. And the one thing he can't be is a looser.
Ironically, given his pronouncements on such things, he is inadvertently driving the world faster towards renewables and clean energy.

 

[Bald Rick]

I think gas and oil stays expensive until some time after he leaves the White House. He's created a huge mess (yoooge, the biggest ever) and there's no way for him to clean it up without being the looser. And the one thing he can't be is a looser.
Ironically, given his pronouncements on such things, he is inadvertently driving the world faster towards renewables and clean energy.

Yep, with California leading the way.

 

[hwl]

TAG Data is not top secret, it's viewable here (link to the UK Govt TAG data book)

TAG data book

Historical and reference information on all the appraisal and modelling values referred to in the transport analysis guidance (TAG).

www.gov.uk

Future costs that transport scheme planners use will for fuel/electricity prices for road and rail are in table A1.3.7 in the spreadsheet linked from the webpage above.


You are correct, the base data in WebTAG contains a single future value for each year. Road and rail diesel resource costs settle to a nice, stable level after 2030, which of course is absolute guff as history shows relatively regular energy price shocks (down as well as up) since at least the 1970s. We've had 3 in the 2020s! (Covid 2020, Ukraine 2022 and Iran this year)

So this potential volatility, if it's considered at all, is being done within the model(s) for the scheme.

It's pretty obvious that energy price shocks will continue to happen, and this should remind us that the kind of models people build using TAG or any other data are tools to aid thinking and judgement. Unfortunately, senior leaders get tempted to use them as a substitute for thinking and judgement and trot out the modelled BCR or whatever as "the answer" - i.e. they are outsourcing their decision-making to a spreadsheet, which is not what you really should pay people the big bucks for.

The DESNZ energy cost estimates used in Green Book and TAG are and have always been on the optimistic side compared to actual prices in practice for the majortiy of time periods. The recovery from price spikes is also unduly optimistic.

This persistent under estimation really hurts electrifcation and fuel efficiency business cases.

 

[Mike Machin]

Apparently the UK only has 42 days stock of diesel and to compound the problem, the UK’s biggest refinery will be shut for diesel production until the middle of November for essential maintenanc. Even with Fawley producing, the UK only produces around a third of its diesel requirements with the remainder being importe. Add to this the potential threat of a US ban on diesel exports, there are real possibilities of diesel rationing.

Apparently, rail is only about halfway down the hierarchy of maintaining supplies of diesel for use, with the emergency services, agriculture, ferries, road haulage and buses and coaches taking priority. With high prices and potential disruption to supplies, will we be seeing reduced services on diesel operated routes?