White House weighs red-dyed diesel tax relief as Goldman warns an export ban would push gasoline higher
Diesel is the whole conversation for anyone moving freight right now. The White House is weighing tax relief on red-dyed diesel to bring pump prices down, per Reuters, while Washington is reportedly looking at suspending diesel exports for 90 days. Both aim at the same thing: cheaper diesel for the people burning it.
The export ban math
Goldman Sachs ran the numbers on a 90-day export suspension. Their analysts figure it could pull diesel down by about $0.25 a gallon every week, but only until storage capacity fills up. Once tanks are full, the drop stops and prices head back the other way. So the relief is real and short. Goldman also warns the same move could push gasoline prices higher, which is the trade Washington would be making: cheaper diesel now, more expensive gas later. Midstream operators look set to handle export curbs without much strain, according to ETF Database's read.
Red diesel and the harvest
Red-dyed diesel is the off-road, tax-exempt fuel that farmers and equipment run. Tax relief there lands squarely on growers, who are bringing in the harvest against record diesel costs. Operators say they are facing a lot of uncertainty on fuel just as the busiest burn of the year starts. For fuel haulers serving ag country, that demand is arriving whether or not the tax question gets settled.
What haulers pay
Fuel surcharges move with on-highway diesel, so a drop at the rack cuts both the carrier's cost and the surcharge line on the invoice. If diesel eases $0.25 a gallon a week even for a few weeks, surcharge schedules could reset lower and shippers will push for it. The catch is Goldman's ceiling. Once storage fills, the same diesel that fell could climb back, and surcharges lag the turn.
Renewable diesel supply
Buffalo Biodiesel picked up its Part 360 permit from New York's DEC and put nearly $3 million into facility upgrades. The company recycles used cooking oil into feedstock for renewable diesel and RNG plants. Small on its own, but it adds diesel supply that isn't exposed to the export question.
What to watch
Whether the 90-day export suspension moves from report to policy, and how fast storage fills if it does. The red-dyed diesel decision and whether relief reaches on-highway fuel or stays off-road. And the surcharge tables: if the rack drops, shippers will move to claw the surcharge back before carriers want to give it.