The president announced this week that he would allow so-called red dye diesel – fuel which is used off-road and does not face federal taxes – to be used on US highways without facing federal levies.
Ruisard said the only difference in the diesel used by truck drivers and everyday consumers and the tax-free red dye diesel is the dye itself.
“The problem with that red dye is, it’s extremely hard to clean it out of your tank,” he explained.
The problem that creates is what happens to trucking companies that use the dyed diesel once the temporary tax relief ends, he said.
“The fines are pretty high for having that in your fuel tank because its considered tax evasion.”
The other issue with expanding the use of red dye diesel, according to Ruisard, is that people and businesses – including rail operators – usually set aside a particular amount of the product.
“If suddenly people go out and they start consuming that diesel, that depletes their available supply as well,” he said.
But another move from Trump has been more successful, according to analysts.
Last week, the G7 countries announced they would release 100 million barrels of oil and diesel from stockpiles to ease supply concerns, following pressure from Trump to do so.
De Haan says the announcement itself – regardless of how much has been released so far – “has worked to push prices down to some degree”.
Economist Pearce agreed but warned the release is only a temporary solution.
“As long as energy exports from the Gulf remain disrupted, stocks will need to be drained further to supply the market,” he said. “And the need to refill those stocks will mean energy prices remain elevated for a period, even when disruption in the Middle East clears.”
