Am I right in saying diesel is only a cheaper option if your doing a lot of miles as petrol is cheaper per gallon ?
Yes and no.
If you're doing big miles, a Diesel is better. You get much better MPG with Diesel for a variety of reasons, (you're not using part of your power to drive the alternator to generate a spark, for a start).
Over short journeys, Diesel is worse. That's counter-intuitive because they make massively higher torque and so get to speed with much less effort. So you'd think they'd be great for short runs. But they're not.
Using real-world figures and assuming an average mileage of 14,000, my V6 Cougar costs me around £2400 a year in fuel. A modern Diesel Mondeo would cost around £1700 for the same mileage. No contest. But my Cougar cost me somewhere around £380 to buy. The modern Mondeo would cost me around £24,000.
Considering the price difference (and ignoring varying taxes) I would have to run the Mondy for 34.5 years before I broke even. There's some wiggle room here because the Cougar won't depreciate, but the Diesel will...but very slowly.
"Yes, but that was a ridiculously cheap car, Chris. What if you bought a petrol car at an average price for a 3-year-old?"
Assuming a price of £6K, it would still take 26.3 years.
If you do 200,000 miles a year though, you'll start saving after 1.8 years. But if you're doing 200,000 miles a year, I bet you're not keeping that car for more than 2 years at most. Also, think about maybe getting a job that lets you see your family more often.
:edit: Comparing two brand new cars makes the deal a bit more appealing. But assuming a petrol car at £22,000 and a Diesel at £24,000, it would still take 2.6 years to break even at average mileage. You'll break even after 2 months if you do 200,000 miles a year.
What do you want to bet that the government, car manufacturers and fuel companies know this and have priced everything accordingly?