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The White House is weighing an unusual plan to help ease soaring diesel costs , but some states have already moved to expand access to what is considered a significantly cheaper fuel source: red-dyed diesel. According to Reuters, the Trump administration is considering regulatory relief that would allow broader sales of red-dyed diesel, a fuel traditionally reserved for agricultural and other off-road uses. On Sunday, President Donald Trump told a Fox News reporter that he is "very seriously" considering a ban on diesel exports.
“That can oftentimes lead to a little bit of an increase in gasoline for cars, so we’re looking at it very seriously. We may do it,” he said. However, the red-dyed diesel proposal is being discussed as an alternative to a diesel export ban and could allow some buyers to avoid federal fuel taxes, helping lower costs amid today’s record-high diesel prices.
Why It Matters Diesel is the backbone of much of the American economy, powering everything from freight trucks to farm machinery and construction equipment. When diesel prices rise, transportation companies often pass those costs along to customers, which often leads to higher prices for food and other essentials. ... What Is Red-Dyed Diesel?
Red-dyed diesel is chemically similar to conventional diesel fuel but contains a red dye that identifies it as fuel intended for off-road use. The fuel is commonly used in: Tractors and combines Timber harvesting equipment Construction machinery Irrigation pumps Other off-road vehicles and equipment But because it is generally exempt from federal and state highway fuel taxes, its use on public roads is normally prohibited and can result in severe penalties. However, the White House proposal would expand the circumstances under which the fuel could be sold or used, potentially lowering costs for both consumers and businesses.
"This measure can shave roughly 4 percent off today’s diesel bill through federal tax relief alone, and potentially 5–6 percent if additional state tax relief applies,” Maksim Sonin, an energy executive and a Visiting Scholar at Stanford's Precourt Institute for Energy, told Newsweek . “That matters even more during the ongoing harvest season." Where Can You Currently Buy Red-Dyed Diesel? Red-dyed diesel is already widely sold throughout the U.S., though it is normally restricted to approved users and off-road uses.
The fuel is commonly available from agricultural fuel suppliers and farm co-ops. Bulk fuel distributors and commercial fueling depots likewise sell this type of diesel, as do some truck stops and fuel stations across the country. However, buyers generally must certify that the fuel will be used for qualifying off-road purposes.
But if the White House acts, all that could change. “It's the one lever they can pull without Congress and without fighting refiners over an export ban,” John Tirado, the founder of Summa Energy, told Newsweek . Which States Are Already Using Red-Dyed Diesel?
Louisiana Louisiana became one of the first states to temporarily loosen restrictions amid the recent diesel price surge. Governor Jeff Landry issued an emergency order on September 23 allowing Louisiana farmers and timber harvesters to use dyed diesel they already have on hand during harvest season, when fuel consumption typically peaks. According to the governor's office, the order suspends penalties through October 22 for certain farm-use and timber vehicles.
The administration said diesel prices in Louisiana had reached a record $6.03 per gallon. "We're not going to sit on the sidelines while Louisiana farmers are paying record prices to harvest the crops that feed our families and support our economy," Landry said in a statement. Texas Texas officials made a similar choice.
Governor Greg Abbott issued a statewide disaster proclamation on Monday allowing expanded use of dyed diesel on Texas roads. Abbott said record fuel prices were placing significant pressure on both agriculture and freight transportation. "Texas agriculture and freight run on diesel," Abbott said.
"Record prices put both industries at risk and raise costs for every Texas family." The new proclamation will raise weight limits for certain commercial loads and also seeks federal waivers that could make more diesel available within the state. Could More States Follow? Many other agricultural states may begin urging federal action as harvest season boosts diesel demand.
“It offers something policymakers and many Americans desperately want right now, which is a way to provide immediate relief from record diesel prices without taking the more challenging step of banning exports,” Alex Beene, a financial literacy instructor at the University of Tennessee at Martin, told Newsweek . While Louisiana and Texas have already issued emergency measures, a federal policy change could make this type of relief available nationwide. “The White House is coming under heavy criticism as many farmers and truckers see their prices soaring.
Those prices inevitably pass through to fuel surcharges and eventually back to the end consumer in the form of higher prices,” Kevin Thompson, the CEO of 9i Capital Group and the host of the 9innings podcast, told Newsweek . “In the short run, you could see prices come down if these “bans” or increased limitations on red-dyed diesel are lifted. But what economics teaches us is that if supply is not increased overall, it will eventually become a price problem in the future.” Where Diesel Prices Are Highest and Lowest Right Now Diesel prices vary significantly across the country.
States on the West Coast continue to face the highest costs due to their stricter fuel specifications and limited refining capacity. Meanwhile, Gulf Coast states remain among the cheapest despite recent increases. While the red-dyed diesel option from the White House could provide relief, Beene said it doesn't create another gallon of diesel or solve the global supply shortage that drove prices above $6 in the first place.
“Consumers could still benefit indirectly if farmers and truckers see lower operating costs, but for prices to trend downward on a more long-term basis, more factors will have to pivot,” Beene said. What Happens Next The White House has not yet announced whether it will move forward with broader access to red-dyed diesel. However, if it was approved, this could temporarily expand the circumstances under which red-dyed diesel can be sold or used.
That could provide a great relief to farmers, truckers and other diesel-dependent industries that are currently facing higher costs. “The futures market has winter diesel trading below today's price, so the market expects some relief,” Tirado said. “But that's an expectation, not a resolution.
Until the conflicts driving this are settled, the risk of another spike is real.” Newsweek’s reporters and editors used Martyn, our AI assistant, to produce this story. Learn more about Martyn here . Contact Newsweek editors on this story: Edward T.
Cummins
Source: Newsweek
