White House Weighs Expanding Tax-Exempt Red-Dyed Diesel Sales as Prices Hit Record $6.53 a Gallon

The White House is considering regulatory relief to expand sales of red-dyed diesel, a tax-exempt fuel typically used for farming, as US diesel prices reached a record $6.53 per gallon last week, according to Energy Information Administration data. The spike stems from reduced Middle East supply and refining interruptions, partly from Ukraine's strikes on Russian energy facilities. The administration has also weighed a blanket diesel export ban, voluntary export limits by refiners, and urged the European Union to release emergency diesel stocks. Red-dyed diesel is chemically identical to on-road diesel but exempt from federal and state highway taxes, which total roughly 9% of a $6 gallon. Off-road diesel accounts for about 30% of US distillate consumption, roughly 18.2 billion gallons annually, per Wood Mackenzie's Jim Mitchell. Analysts said the measure would do little to ease prices. Rystad Energy's Preben Sorli said it "would not change the underlying wholesale diesel price," while Gulf Oil's Tom Kloza noted it doesn't shift overall domestic diesel production.