You're correct, we should be able to do it. This country is still in the 1970's when it comes to power generation and the adaptation of diesel to small cars. Allowing the Punishment Agency to run rampant hasn't helped either.
The other problem is that since we score so low in math, many users cannot see the advantage of the usage variance over the price variance, and dismiss diesel simply because is costs a little more per gallon.
They will, however, line up to buy hybrids for their slight FE advantage, then drive them on the highway at 65 MPH for their supposed advantage, while lugging around the 900# of batteries.