The White House may introduce tax breaks on "red" diesel to lower fuel prices - media
Kyiv • UNN
The Trump administration is considering broader sales of red diesel to lower prices. The average price of diesel in the United States has exceeded $6\r\nper gallon.
The White House is considering easing regulatory rules that would allow broader sales of diesel fuel dyed red. The move, aimed at reducing rapidly rising prices, could allow some buyers to avoid paying the federal fuel tax. Reuters reports this, citing two people familiar with the discussions, according to UNN.
Details
The proposal to use red-dyed fuel emerged from lengthy discussions within the administration as one of the main alternatives to banning diesel fuel exports. The issue of such a ban was raised because disruptions in global supplies drove prices to record levels. President Donald Trump supported the idea of a ban, but it faced significant opposition from the oil industry and other business representatives.
The Trump administration is seeking ways to lower diesel fuel prices without disrupting supply stability or creating additional costs for other sectors of the economy. It is acting amid growing pressure driven by the need to reduce fuel costs ahead of the November midterm elections, as well as concerns about approval ratings for Trump's economic policies.
As Reuters reported last week, the administration is also trying to obtain voluntary commitments from major oil refiners to limit diesel fuel exports, considering alternatives to a government-imposed ban. Energy Secretary Chris Wright contacted the heads of several major oil refining companies to determine their willingness to take such a step.
A White House representative said that no final decisions had been made, but that the president was considering all options to lower prices.
On Sunday, while attending the Presidents Cup golf tournament in Illinois, Trump told a Fox News reporter that he was considering a ban on diesel fuel exports "very seriously."
"This can often lead to some increase in gasoline prices for cars, so we are considering this issue very seriously. We may do it," he added.
To add
According to the media's sources, this tax initiative would expand the conditions under which red-dyed diesel fuel—which is generally intended for use off public roads, such as in agriculture, and is exempt from most federal fuel taxes—could be sold for broader use. The administration is considering the proposal because Trump wants to reduce fuel costs, which have risen sharply in recent weeks. Under current federal rules, the tax on highway diesel fuel is 24.4 cents per gallon, while "dyed diesel fuel" is exempt from that tax but remains subject to a 0.1-cent-per-gallon fee that funds the federal Leaking Underground Storage Tank Trust Fund.
Allowing broader sales of dyed diesel fuel could reduce the federal tax burden on eligible purchases, although the impact on the price paid by consumers would depend on how the relief is structured and what portion of the savings is passed on to fuel sellers.
Lawmakers from the farm belt are also pressuring the administration and Congress to act, as high diesel fuel prices are putting pressure on farmers ahead of the harvest, when fuel is a major operating expense. U.S. Representative Ashley Hinson, a Republican running for the Senate in Iowa, called on the House of Representatives to return to Washington before the midterm elections, suspend diesel fuel exports and the federal gasoline tax, and offer a diesel fuel assistance program for farmers and truckers.
Patrick De Haan, head of petroleum analysis at GasBuddy, said the proposal would not resolve the supply imbalance that has driven up prices for on-road diesel fuel. He noted that farmers already use tax-exempt dyed diesel, although allowing truckers to use the fuel could save them the federal tax without increasing diesel supplies.
"I don't think it will have any impact," De Haan said. "It's simply diesel fuel with red dye added that is not taxed. It does nothing to improve supply or affect the price."
The idea emerged after several states eased restrictions on dyed diesel amid rising fuel prices. Alabama, Louisiana and Nebraska have taken temporary measures in recent days to allow wider use of tax-exempt fuel or suspend state penalties, while Alabama and Louisiana have sought additional relief from the federal government.
The potential move comes as the national average price of diesel fuel has exceeded $6 per gallon, putting greater pressure on farmers, truckers and other businesses that rely on the fuel.