The White House seems to be passing the diesel hot potato to the states — and some of them are acting (and I expect that many more would follow). Yesterday, Texas announced it will allow the use of so-called “dyed diesel” on its roads. Dyed diesel is like normal diesel but cheaper because much lower taxation (and typically it can only be used for farming, construction and other non-road uses). The measure would save Texas truckers the 24.4 cents-a-gallon federal excise tax plus another 20 cents from Texas state tax. But, importantly from a political stand point, the measure doesn’t lower diesel cost to farmers, which already have access to untaxed dyed diesel. Other states have higher state diesel taxes (the national average for the state tax is 35.5 per gallon), suggesting that the measure could reduce diesel prices for road uses (mostly freight) by ~60 cents per gallon across the country if all states implement it. (By allowing the use of dyed diesel, the White House / state governors can fast track the tax relief in a much faster way that trying to suspend the federal and state fuel duties, which would require legislature approval. It’s a tax loophole)