Federal officials have taken the rare move of temporarily letting Iowa retailers sell a special form of diesel for use in any engine, not just engines that run “off-road.” Diesel with a higher sulfur content that contains a red dye is normally restricted to vehicles and generators used on farms and construction sites because state and federal road taxes are not assessed on that type of fuel.
Jennifer Moehlmann, a fuel market analyst for the Iowa Department of Natural Resources, says the kind of diesel truckers and others buy at the gas station has a lower sulfur content, to improve air quality, and road taxes are charged on that diesel. “The special dispensation that E-P-A has given, because we have a shortage here of the low-sulfur, regular diesel, is to use this high-sulfur, red-dye diesel on the road as long as all applicable state and federal taxes are paid for the on-road use,” Moehlmann says.
She predicts diesel prices at the retail pump won’t change much, whether it’s red-dye diesel or the regular kind. But Moehlmann says after weeks of escalating diesel prices, the move probably will freeze prices. “It could bring it down marginally just by a few pennies, but basically what it will really prevent are any outages at the retail station, or at least any widespread outages,” she says. There have been outages at the wholesale level, due to disruptions in diesel production caused by the hurricanes coupled with the high demand for diesel in Iowa at harvest time.
Retailers have had to drive further to get regular diesel and this move will allow them to go to their regular fuel terminals and get the high-sulfur diesel that’s already there. Moehlmann says environmental experts don’t know whether having more vehicles burning the higher-sulfur fuel will cause air quality problems. “That’s why the E-P-A only granted it for short-time use through November 13th is because long-term it could cause air quality problems,” Moehlmann says. “But short-term, because there has been determined to be a shortage of the fuel, they’re o-kay with us using (red-dye, high-sulfur diesel).”
Governor Tom Vilsack and other Midwestern governors asked the E-P-A to make the accommodation to ease the diesel supply problems striking states during this year’s harvest.