- The U.S. government could allow for broader sales of red-dyed diesel.
- It’s typically reserved for agriculture, power generation, and off-road use.
- Fuel faces significantly lower taxes, which could save drivers money.
The national average price of a gallon of diesel hit an all-time high of $6.53 on September 22. While the price has now dropped to $6.45 per gallon, it was $2.77 more than a year ago. If that wasn’t bad enough, diesel costs an average of $8.40 in California.
This is pushing up prices for an assortment of goods as diesel is the lifeblood of the economy. It’s also annoying farmers, and with mid-term elections right around the corner, politicians are doing their thing.
More: With Diesel At An All-Time High, Everything Is Getting More Expensive
America’s affordability crisis is expected to hammer Republicans, which control the House, Senate, and, of course, the White House. The writing has been on the wall for a while, but panic is starting to set in as the Iran war has dragged on for months with little to show for it and no immediate end in sight.
In a bid to bring diesel prices down, officials were exploring a ban on exports. This annoyed oil companies and American allies, which would be faced with even higher diesel prices at home.
Reuters reports the U.S. is now considering “broader sales of red-dyed diesel” as part of an effort to lower costs. If you’ve never heard of the fuel before, it’s essentially diesel for farming and off-road use. It’s also dyed and is taxed at a far lower rate.
As the publication noted, “the tax on highway diesel is 24.4 cents per gallon, while dyed diesel is exempt from that [federal] tax but remains subject to a 0.1 cent per gallon charge.” In effect, allowing wider sales of red-dyed diesel would equate to a diesel tax holiday.
While it remains to be seen if the government will move forward with the idea, there’s plenty of skeptics. As GasBuddy’s Patrick De Haan noted, farmers already use red-dyed diesel, so it likely wouldn’t save them much. Supplies would also be unaffected, so the overall impact would be minimal as drivers of diesel-powered trucks could expect to save 24.3 cents per gallon ─ at best.
The publication noted the American Petroleum Institute welcomed the idea. This came shortly after it slammed a possible diesel export ban as something that would “wreak havoc at home and abroad.”
In a press release, the group said banning exports is “not the quick fix proponents hope” and could “further raise prices here in the United States.” It also pointed to numerous Republicans who panned the idea as a “gimmick,” “super clumsy,” and something that “doesn’t really move the needle.”
