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Ag economist warns red dyed diesel policy could raise the cost for farmers 

An ag economist is sounding the alarm over the widespread suspension of restrictions on red dyed diesel.

Gabriel Lade with Ohio State University says while the move would lower costs in the short-term, it could have long-term ​ consequences for producers.

“An increase of just a few cents in that off-diesel farm cost could put farmers in a worse position,” he says. “Knee-jerk reaction policies can backfire.”

He tells Brownfield suspending fuel taxes doesn’t address the factors pushing prices higher.

“We are in a supply constraint environment,” he says. “The refineries are at capacity. By cutting taxes, we don’t change the supply conditions. U.S. diesel consumption starts to go up as a result of that and the off-road diesel price starts to go up.”

Lade says the increased diesel demand could increase the cost of off-road diesel by an average of $391.

Indiana, Nebraska, Alabama, and Texas have all temporarily waived or suspended the enforcement of red dyed diesel restrictions.

According to AAA, the national average for diesel was $6.38 per gallon as of Monday, up from $3.68 this time last year.

AUDIO: Gabriel Lade, Ohio State University