Key facts
- US diesel prices remain near record highs, up 70% since the US-Israeli war on Iran began.
- President Donald Trump's administration has implemented measures to boost diesel supplies, including urging allies to release emergency reserves and allowing tax-exempt red-dyed diesel on public roads.
- Average US diesel prices reached $6.28 a gallon on Thursday.
- Analysts state that only a durable end to conflicts in the Middle East and between Russia and Ukraine can prevent further oil price increases.
- The administration's initiative to allow red-dyed diesel on public roads has seen limited industry uptake due to tax liabilities and logistical hurdles.
- The tax savings from using red-dyed diesel are relatively small with current diesel prices.
US diesel prices remain near record highs, up 70% since the US-Israeli war on Iran began, despite two recent initiatives by President Donald Trump aimed at increasing fuel supplies. The average price for diesel reached $6.28 a gallon on Thursday, according to AAA.
Analysts suggest that only a lasting resolution to conflicts in the Middle East and between Russia and Ukraine can significantly lower oil prices. Bob McNally, president of Rapidan Energy Group, stated that policy options are "marginal to counterproductive" unless these geopolitical issues are resolved.
The Trump administration's efforts include pressuring allies to release emergency oil reserves and expanding access to tax-exempt red-dyed diesel for use on public roads. However, the red-dyed diesel initiative has seen limited adoption by the industry due to concerns over unclear tax liabilities, logistical challenges, and potential fines when crossing state lines. The tax savings are also considered small given the high price of diesel.
David Fialkov, president of NATSO, which represents truck stops, noted that most reputable retailers are unlikely to sell dyed fuel through non-traditional channels. John Tirado, president of Summa Energy, described the red-dyed diesel plan as a "Band-Aid on a much bigger problem."
A White House official stated that the administration is focused on easing temporary disruptions while pursuing longer-term energy policies. The G7 agreement to release 100 million barrels of oil and petroleum products was touted as a major step, though the administration clarified that these barrels were front-loaded with diesel and released on a tight timeline, differing from previous commitments.
Caspian Conran, lead economist at Baringa, attributed the current situation to an "exceptionally tight global market for refined products" and described the administration's measures as short-term steps ahead of the election that might offer a "few weeks of relief."