Audi of America can barely keep up with demand for diesel products. CEO Johann De Nysschen is shown here with the A3 TDi, the 2010 Green Car of the Year.

Diesels are big business, or so claims an industry trade group that today revealed new research that finds that when you add up everything from engine manufacturing to the production of fuel it generates $480 billion annually and supports 1.25 million jobs.

The timing of the report couldn’t be better for proponents of “oil burners.”  After years of largely being ignored by American consumers, diesels are starting to gain traction in the U.S. market, sales of existing models like the imported Volkswagen Jetta TDi surging, while General Motors has announced plans to launch a diesel-powered version of the compact Chevrolet Cruze that could deliver better highway mileage than the best of today’s hybrids.

“Diesel is a major economic factor and job creator in the U.S. economy and is vital to America’s economic recovery and growth,” said Allen Schaeffer, the Executive Director of the Diesel Technology Forum, during a speech at the National Press Club in Washington, D.C.  “Diesel not only provides jobs in the manufacturing and refining industries, it provides equipment and engines to our agricultural, mining and construction industries, and transports virtually every commodity available to American consumers.

The Forum released a study by the Aspen Environmental Group and M.Cubed that found the production diesel fuel and equipment directly contributed $183 billion to the economy and another $300 billion through “indirect and induced ripple effects.”  All told, the study claims the industry also supports 1.25 million jobs.

And there are signs of growth to come.  The report notes that the U.S. diesel industry has an unusually high export ratio, with both machinery and fuel being shipped abroad.  Europe is a major market, no surprise considering roughly half of all its car buyers are today opting for diesel vehicles.  But demand is booming in other markets, including emerging economies such as China, noted Schaeffer.

Here at home, diesels are used to move more than 80% of all freight, the new study shows, whether by truck, rail or sea.

Meanwhile, the recently announced increase in federal fuel economy standards should build demand in the U.S. for diesel power.

“National fuel economy standards for cars and light-duty trucks beginning in 2017 are expected to be met in part by an increasing number of clean diesel passenger vehicle choices,” said Schaeffer. “Similarly, first-ever fuel efficiency standards for medium- and heavy-duty commercial trucks and buses beginning in 2014 will drive further innovation and efficiency gains in diesel technology as a key compliance strategy.”

German automakers VW, Audi, Mercedes-Benz and BMW have all ramped up their diesel line-ups in recent years.  With some models, demand in the U.S. is now topping 30%.  Other makers are planning to follow, notably including GM, its decision to launch a diesel Cruze “a very strong statement,” the Forum’s Schaeffer said in an interview with TheDetroitBureau.com.

Mazda is also planning to go diesel with a new version based on its cutting-edge SkyActiv technology.  And Chrysler will also add a diesel to its Jeep line-up, with other diesels reportedly under discussion with its Italian partner Fiat.

Diesel sales jumped 37% in the U.S. passenger car market during the first eight months of 2011, according to industry data.  At an estimated 3.4% of the market the technology now accounts for a larger share than all hybrid, plug-in and battery-electric vehicles combined.

The California-based research firm, AutoPacific, Inc., estimates diesels will jump to a 4.7% market share by 2015, but other sources – not surprisingly including the Diesel Technology Forum – put the figure closer to 10% or even higher.  The actual number will depend on whether other manufacturers commit to adding diesels to their line-up, said Schaeffer in an interview.