Diesel and gasoline are both ICE.

I agree that EVs will eventually replace diesel and gasoline vehicles, but that's decades away. Via Motors will soon be selling a plug-in hybrid version of the Chevy pickup truck. Battery costs help to drive the price of this truck up to $79,000. To make a pure EV version would cost even more.

While a Gen III Prius might do a bit better than the 47 mpg I'm averaging in my Jetta TDI Sportwagen, the Prius has less useable cargo room (large dog crate wouldn't fit) and the Prius is also less fun to drive. To match the Jetta Sportwagen in cargo room I'd have to get a Prius V, which apparently would not beat the Jetta TDI in real world cost of fuel.

Diesel cars would sell better in America if EPA would fix their testing to accurately show the difference between diesel and gasoline efficiency. I'd bet a paycheck that in an apples vs. apples highway test, the Cruze Eco couldn't come close to the Jetta TDI, even though both are EPA 42 mpg highway. It's not just "several owners seem to be getting significantly more" than the EPA ratings in their Jetta TDIs and other diesel cars. Almost nobody seems to average only 34 mpg combined in a Jetta TDI as EPA claims. My 2009 Jetta TDI Sportwagen was averaging 41-42 mpg combined until I slowed down to the speed limit and weaned myself off the heavy foot (a habit from owning an RX-7 years ago). Now I'm averaging 47 mpg combined.

A 2011 VW Jetta Sportwagen TDI DSG costs $2350 more than a comparably equipped gasser - a bit less if one could spec the gasser with the DSG tranny rather than the regular auto tranny. I don't see why a Transit Connect diesel would cost $4000 more than the gasser. As others pointed out, the diesel cars that are available in the US sell reasonably well relative to their gasoline counterparts. So I think the 'diesels cost too much' argument is a little off the mark.
Another thing that is holding back diesel sales in the US is the EPA's overly low estimates for diesel car fuel economy. Per fueleconomy.gov, the average Prius driver gets 1 mpg less than the EPA estimates, but the average VW JSW TDI driver beats EPA estimates by about 5 mpg.

@John, agreed, America would be better off if our standard was gallons per 100 miles rather than mpg. This would be analogous to Europe's liters per 100 km. Nevertheless, based on the difference observed when the same drive train is put into somewhat larger vehicles from other manufacturers, I expected a smaller mpg difference between the Prius and Prius V.

I'm surprised that the fuel economy is 10 mpg lower for the Prius V compared to the Prius. I understand that the Prius V has the same drive train, is about 6 inches longer, a few inches taller, and has a slightly lower (though still very good) drag coefficient. Presumably it weighs a few hundred pounds more. I was guessing something closer to a 5 mpg reduction in FE for the Prius V compared to the Prius.

@Laura Mokelke - we paid a welder $100 to modify a wire dog crate to fit in the back of our Jetta TDI Sportwagen without having to fold down the rear seats. Our 95 lb dog rides in that crate.

The VW Jetta Sportwagen TDI can be a good choice for a high mpg dog car. We use our 2009 JSW TDI to transport 1 medium size dog and 1 large dog inside their crates. We average 41-42 mpg in mixed suburban and highway driving, using no hypermiling tricks. Most owners of 2009 or later Jetta TDIs average 39-40 mpg, which as John wrote is well in excess of what EPA claims it should get. If you compare the usable cargo volume of wagons and small crossovers you may be surprised to find that wagons are competitive. The large tires on most crossovers create wheel wells that intrude into the cargo area, making dog crates less feasible.