What is red-dyed diesel and can it help lower prices, as Trump wants?
USO•The White House is considering expanding sales of tax-exempt red-dyed diesel as U.S. diesel prices hit a record $6.53 per gallon. Analysts said wider access could help eligible users but would do little to increase supply or lower wholesale prices.
1. Proposed diesel relief
The White House is considering broader sales of red-dyed diesel as fuel costs rise following supply disruptions linked to the U.S. conflict with Iran, Ukrainian strikes on Russian refineries and declining global inventories. It has also weighed a diesel export ban and voluntary export limits by refiners, and urged the European Union to release emergency diesel stocks.
2. Fuel and tax rules
Red-dyed diesel is chemically similar to standard diesel but is exempt from highway fuel taxes and generally intended for off-road use, including farming and construction. Using it in vehicles on public roads is illegal. Federal diesel taxes and fees total 24.4 cents per gallon, while state diesel taxes average about 35.5 cents.
3. Analysts see limited impact
Off-road diesel accounts for about 30% of U.S. distillate consumption, or roughly 18.2 billion gallons annually. Analysts said broader access could provide some relief to eligible users but would not increase domestic diesel production or change wholesale prices; the main effect could be lower tax revenues.
