White House weighs red-dyed diesel tax relief to lower fuel prices

As soaring diesel prices weigh heavily on farmers, truckers and other businesses, the White House is exploring regulatory changes to lower fuel costs, according to two sources with knowledge of the discussions. A proposal to allow broader sales of red-dyed diesel, which is currently exempt from most federal fuel taxes, has emerged as a leading alternative to a diesel export ban.

The proposal would enable some buyers to avoid paying the federal fuel tax, potentially reducing the cost of diesel for eligible purchases. However, the impact on consumer prices would depend on how the relief is structured and the extent to which savings are passed on by fuel sellers. The administration is also seeking voluntary commitments from major refiners to limit diesel exports, as it weighs options to ease fuel costs ahead of the November midterm elections.

Energy Secretary Chris Wright has reached out to executives at several major refiners to gauge their willingness to participate in such an action. President Donald Trump has indicated his openness to the idea, telling a Fox News reporter that he is "very seriously" considering a ban on diesel exports. However, some experts argue that the proposal would not address the underlying supply imbalances driving up diesel prices.