Off-road diesel and red diesel prices
How off-road diesel (red dyed diesel) is priced in the United States, why it can cost less than on-highway diesel, and which published series to watch.
Off-road diesel, often called dyed or red diesel, is diesel marked with red dye for qualifying nontaxable uses. At the federal level it generally avoids the 24.3 cent per gallon highway excise tax, although the 0.1 cent per gallon LUST tax still applies; state tax treatment varies.
EIA does not publish a national price series specifically for off-road diesel. Supplier prices are set locally and vary with tax treatment, wholesale costs, delivery terms and supplier margins.
For a rough benchmark, follow the on-highway diesel trend, then account for the federal highway tax difference and applicable state and local tax treatment. Local wholesale prices, delivery charges and supplier margins also matter, so confirm the actual price with a supplier.
Using dyed diesel for a taxable highway use is prohibited, and significant federal penalties can apply. The dye allows enforcement authorities to identify fuel intended for qualifying nontaxable uses.
Common questions
What is red diesel?
Red diesel, more commonly called dyed diesel in the United States, is diesel marked with red dye for qualifying nontaxable uses. It is commonly used in off-road equipment such as farm machinery, construction equipment and generators.
Is it legal to run red diesel in a truck on the road?
Dyed diesel generally cannot be used for taxable highway operation. Knowingly using dyed fuel for a taxable use can trigger federal tax and penalties, subject to specific statutory exemptions.
How much cheaper is off-road diesel than pump diesel?
There is no fixed discount. At the federal level, qualifying dyed diesel generally avoids the 24.3 cent per gallon highway excise tax but remains subject to the 0.1 cent LUST tax. State and local tax treatment, wholesale pricing, delivery quantity and supplier terms also affect the final price. The estimator above provides a rough tax-adjusted benchmark.