I have got good news for you. Starting this summer VW will start selling 50 state legal diesels in the US. 2.0L, 140hp, 240ish ft/lbs and estimated 55mpg!
http://www.autobloggreen.com/2008/05/06/first-new-vw-jetta-tdis-now-in-transit-to-us-dealers/
Why did Volkswagen stop offering diesel engines in their cars? Is it the EPA's fault (they don't like the particulates that come out of the exhaust), or is it California's fault (it's not worth it to make 49 state legal diesels)?
All I know is that a 2006 VW Golf diesel is rated at 37 city / 44 highway MPG. Better than pretty much anything on the road right now that that is not a hybrid.
Volkswagen quality is not the greatest, but offering diesels again with gas fast approaching $4.00/gal would be a big boost to their sales.

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