The White House is considering broader sales of tax-exempt red-dyed diesel as diesel prices climb above $6 a gallon nationally. The proposal could reduce the federal tax burden on eligible purchases, but its effect on consumer prices would depend on how relief is structured and passed through.
The Trump administration is weighing regulatory changes that would allow broader sales of red-dyed diesel, generally reserved for off-road uses such as farming and exempt from most federal fuel taxes. The federal tax on highway diesel is 24.4 cents per gallon; dyed diesel is subject to a 0.1-cent-per-gallon charge for the federal Leaking Underground Storage Tank Trust Fund.
The proposal is among the administration’s leading alternatives to a diesel export ban, which President Donald Trump has backed. Officials have also sought voluntary export limits from major refiners, and a White House official said no final decisions have been made.
GasBuddy petroleum analyst Patrick De Haan said wider use of dyed diesel would not address supply imbalances and could let truckers save the federal tax without increasing diesel supplies. Alabama, Louisiana and Nebraska have recently taken temporary steps to broaden use of the fuel or suspend state penalties. The American Petroleum Institute said it welcomed consideration of options including red-dyed diesel waivers.
