SACHA PFEIFFER, HOST:
The price of diesel is near a record high. So President Trump has released an executive order aimed at lowering that cost by making one kind of fuel more accessible. It's often called red-dyed diesel. And NPR's energy reporter Willa Rubin is on the line to explain to us what that is. Hi, Willa.
WILLA RUBIN, BYLINE: Hello. How are you? Thank you.
PFEIFFER: I'm good. So what is red-dyed diesel?
RUBIN: This is a great question. I put this to Will O'Neil, principal analyst at S&P Global Energy. He is a follower of all things diesel.
WILL O'NEIL: Red-dyed diesel is diesel with red dye in it. That's it.
RUBIN: And the reason this diesel is dyed red is because it's taxed differently because it's used differently.
PFEIFFER: And how is it used differently?
RUBIN: Well, it's used for agricultural equipment and other things that go off road. It's not for vehicles that go on the highway, and it's usually exempt from federal taxes. On the other hand, regular diesel has a federal tax of about 24 cents a gallon. Now, normally, you can get in trouble with the IRS for driving with dyed diesel on highways. The red makes it easier to catch someone who filled up their tank with the wrong stuff. Here's Will O'Neil again.
O'NEIL: Because it's effectively a form of tax evasion.
RUBIN: Now, the latest executive order says dyed diesel will be allowed on highways through the end of the year. No IRS fines.
PFEIFFER: So I assume if it is exempt from federal taxes, that is the way it's supposed to save people money. It's cheaper.
RUBIN: Cheaper, yes. It could help farmers, truckers, other workers who use diesel to do their jobs. The executive order said this move would put money directly into their pockets, quote, "to support their vital service to our nation."
PFEIFFER: And explain more what that would look like, how farmers and truckers would be using this in a different way.
RUBIN: So imagine that I am a farmer, and I normally use red-dyed diesel in my tractor on my field. Well, now I can also use it to fill up my van, get on the highway and take my vegetables to market. Now, states also tax fuel, and a handful have recently also said that drivers can use red-dyed diesel on their highways. So best-case scenario, without those state taxes and federal penalties, you get a total savings of about 60 cents a gallon. But for context, a gallon of regular diesel is now about $2.60 higher than it was a year ago, and that is largely because of the wars in Iran and Ukraine. They've really affected the global fuel supply.
PFEIFFER: And by bringing red-dyed diesel on the market, is the idea that this will overall bring more diesel out to the public?
RUBIN: Yeah, technically, this will increase the total amount of diesel that people could use. But Jaime Brito, the executive director of oil markets at Dow Jones Energy, he points out that this doesn't mean most people can easily access it.
JAIME BRITO: When was the last time that you went to a pumping station and you saw that one of the stations gave you the possibility to feed red diesel into your truck?
RUBIN: Yeah, you can't buy this at most gas stations. You have to go to a special wholesaler, like where farmers go, or maybe some gas stations in rural areas have it. In an email to NPR responding to these critiques, White House spokesperson Taylor Rogers wrote that the President wants to see prices fall and has taken, quote, "historic measures" to alleviate oil supply disruptions.
PFEIFFER: Besides this attempt at bringing fuel prices down, diesel prices, is there anything else the Trump administration could do to lower the price of diesel?
RUBIN: I mean, analysts tell me there's no silver bullet here. You may have heard the phrase diesel export ban floating around. The idea here was that, surely, if the U.S. stops sending the diesel that we refine here to other countries, then we would have more, and then our prices for diesel would go down. But bottom line, refiners pushed back on this. It would be bad business for them. President Trump said late Friday he was not seriously considering the ban. Experts told me, you know, the only real fix here is addressing the big picture problems, the wars in Ukraine and Iran. And until there is more oil flowing freely around the world again, it's hard to see the price of diesel getting much lower.
PFEIFFER: That's NPR's Willa Rubin. Thank you.
RUBIN: Thank you. Transcript provided by NPR, Copyright NPR.
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