Dyed diesel does nothing to add barrels, so the market is likely to read it as a demand-side and political signal, not a supply fix, which leaves distillate tightness as the main support for crude. The bigger price risk remains the export ban debate: talk of it has already widened the Brent premium over WTI, and a formal move would push that spread and global diesel margins higher while pressuring US refiners' crude runs. Any sign that Washington prefers tax relief to export curbs could ease the fear of a ban, but it would not touch the Iran-driven supply disruption behind Brent near $105.---Earlier:Goldman Sachs: A US diesel export ban would backfire on gasoline pricesGoldman: US diesel export ban would cut US prices about 4%, lift European cost (d'uh)---Washington is exploring tax-exempt dyed diesel as a softer alternative to an export ban, but analysts say it does nothing to fix the supply squeeze behind soaring prices.Summary:The White House is considering relaxing rules to allow wider sales of red-dyed diesel to curb soaring fuel prices, according to two people familiar with the discussions.A White House official said no final decision has been made and that Trump is weighing all options that could help lower prices.Red-dyed diesel is normally limited to off-highway uses such as farming and is exempt from most federal fuel taxes, so wider sales could let some buyers avoid those taxes.After several days of government discussion, the idea has become one of the main alternatives to a diesel export ban.US diesel is above $6 a gallon, and a fuel analyst says dyed diesel does nothing to improve supply or lower prices.Energy Secretary Chris Wright has approached major refiners about voluntary export limits, and several states have temporarily eased dyed diesel restrictions.The White House is considering relaxing rules to allow wider sales of red-dyed diesel fuel in an effort to curb soaring fuel prices, according to two people familiar with the discussions. A White House official said no final decision has been made, but that President Donald Trump is weighing all options that could help lower prices.Red-dyed diesel is normally limited to off-highway uses such as farming and is exempt from most federal fuel taxes. Regular highway diesel carries a federal tax of around 24 cents a gallon, so wider sales could let some buyers avoid that levy, which is why the idea is being framed as tax relief. After several days of government discussion, broader dyed diesel sales have become one of the main alternatives to a possible ban on diesel exports, which the oil industry has opposed.The pressure behind the debate is clear. Average US diesel prices are above $6 a gallon, with AAA data cited by Al Jazeera showing around $6.50 on Friday, up from about $5.61 a month earlier. The costs are hitting farmers at harvest time and squeezing trucking operators. Diesel has been driven higher by supply disruptions tied to the wars in the Middle East and Ukraine and by export bans in Russia and China.Not everyone thinks the dyed diesel option would help. A fuel analyst said it does nothing to improve supply or lower prices, since it is simply diesel with red dye added that is not taxed. The main US oil industry trade group has said it supports considering red-dyed diesel waivers as part of a wider set of cost-cutting options, and several states, including Alabama, Louisiana and Nebraska, have temporarily eased their dyed diesel restrictions. Energy Secretary Chris Wright has also reached out to executives at major refiners about voluntary limits on exports.The alternative being weighed is a much bigger step. US diesel exports are equivalent to around 40% of domestic consumption, making the country the world's largest exporter, and Europe and Latin America depend heavily on the supply. Analysts have warned that an export ban could backfire by forcing those buyers to bid up other supplies, while one research estimate suggests full restrictions could cut US refinery output by roughly 750,000 barrels a day.Attention now turns to whether the White House confirms any change to the dyed diesel rules, whether the export ban stays on the table, and how far diesel prices and the Brent premium over WTI move in response.---More:Texas has lifted its ban on running dyed diesel, the tax-exempt fuel normally reserved for farms and heavy equipment, in vehicles on public roads. It has also raised the weight limit to 95,000 lbs for trucks carrying fuel, agricultural products and timber. Governor Greg Abbott said record prices threaten both the fuel and agriculture industries, and Texas diesel reached a record of around $6 a gallon last week.The state has also suspended its own clean diesel rules as far as the EPA allows, and it has asked the EPA to waive the federal ultra-low sulfur diesel requirements. Higher sulfur fuel can gradually clog the filtration, catalyst and diesel exhaust fluid systems on newer vehicles, which hurts performance and can cause damage.---As background ... The dye is a marker for tax enforcement. It makes diesel that isn't taxed for road use easy to spot.In the US, diesel sold for road vehicles carries a federal excise tax of around 24 cents a gallon (plus state taxes), which helps pay for highways. Diesel sold for off-road uses such as farm machinery, construction equipment, heating and generators is exempt from most of that tax, since those machines don't use the roads. The fuel is chemically the same, so the red dye is what tells the two apart.Inspectors from the IRS and state agencies can dip a truck's fuel tank or check a pump to see if it holds red diesel. Finding dyed fuel in a vehicle on the road can bring heavy fines, so the dye works as a deterrent and a way to catch evasion.That is why the White House idea matters to the tax question. Wider sales of dyed diesel could let some buyers who normally run on taxed fuel avoid the levy, which is the "circumvent federal fuel taxes" point. It would lower the price paid at the pump for those buyers, but as the fuel analysts note, it adds no barrels and does nothing for supply. This article was written by Eamonn Sheridan at investinglive.com.