White House weighs red-dyed diesel tax relief to lower fuel prices
USO•The White House is considering broader sales of tax-exempt red-dyed diesel to help lower fuel prices. The national average diesel price has climbed above $6 a gallon, while the federal tax on highway diesel is 24.4 cents per gallon.
1. Tax relief under consideration
The administration is weighing regulatory relief that would expand the circumstances in which red-dyed diesel, generally reserved for off-road uses such as farming, could be sold for broader use. No final decision has been made. Dyed diesel is exempt from the federal highway fuel tax but remains subject to a 0.1-cent-per-gallon charge for the Leaking Underground Storage Tank Trust Fund.
2. Export limits also discussed
The proposal is one alternative to a diesel export ban, which President Donald Trump has backed. The administration has also sought voluntary commitments from major refiners to limit diesel exports. Trump said he was “very seriously” weighing a ban and added, “We may do it.”
3. Questions about price impact
Patrick De Haan of GasBuddy said broader dyed-diesel use would not address supply imbalances or increase diesel supplies, though truckers could save the federal tax. Farm Belt lawmakers are pressing for relief as high fuel costs squeeze farmers ahead of harvest. Alabama, Louisiana and Nebraska have temporarily taken steps to allow broader use of the fuel or suspend state penalties.
