Once upon a time, all diesel was sold without dyes. Now the United States requires all diesel gas to be sold as either clear or colored with dye. The main reason for the added dye is to clean the air and collect fuel taxes. But, for reasons that are discussed below, you want to be careful to use the right type of fuel for its approved use. Whether you buy dyed diesel or sell dyed diesel, there are some things that you should know.

Clear diesel:

The fuel sold without added dyes is known as clear diesel. It is road vehicle grade and is available to the general public at any regular gas station. If you drive an “everyday” vehicle with a diesel engine like a truck or SUV, this gasoline is meant for you. Clear diesel can also be used in boats. Any vehicle licensed by the DMV for on-road use must use clear fuel. This is because it has low sulfur levels and is legally taxable.

Dyed diesel:

In the United States most dyed diesel will come with a red dye added and is a high-sulfur fuel. It is not usually available for public purchase. But perhaps you have seen a red color fuel at a fuel station before. This red dyed gas is only for use in off-road vehicles that are commonly used in farming or construction. Since this gasoline is not supposed to be used for on-road vehicles it is rebated instead of taxed by the U.S. government and is, therefore, sold at a lower price than other fuels. The dyeing rules and regulations are monitored by the Environmental Protection Association (“EPA”).

While the United States requires high-sulfur fuel to be dyed red there are also other colors of dyed diesel. None are available for public purchase and are dyed in assorted colors to keep them separate from clear and red diesel. A blue dye is used by government on-road vehicles and some purple or green dyes are used in aviation gasoline.

Some important things you should know about dyed diesel:

It is commonly believed that dyed diesel causes a loss of performance when used. There is no proven link between the different dyes and a loss of performance. Red diesel fuel is no different than regular diesel in a commercial vehicle – but it is illegal. Because of its high sulfur content, it is not suitable for on-road use.

And because dyed diesel is not taxed, the U.S. government is strict about its use. If you are a consumer and you knowingly use dyed diesel in an on-road vehicle you could face a substantial fine (which can run into the thousands!) or other penalties such as significant jail time. If you are a distributor and you knowingly transport dyed fuel with the intent to supply it to on-road vehicles you are subject to the same legal penalties. Likewise, if you own a fuel station that carries dyed diesel you cannot knowingly sell the gas for use in an on-road vehicle.

A law enforcement officer is legally allowed to do random spot checks and take a sample of fuel from any gas tank. If dye is found in an on-road vehicle the owner will face consequences.

Since criminals like to avoid paying taxes on standard fuel some groups try to remove dye and sell it to unsuspecting motorists. Removing dye from fuel still leaves behind traces of dye that can be tested and identified in a lab. It is a criminal offense and, depending on the state in which you are caught, there are very serious penalties for selling or using dyed diesel that has the dye removed.

You should, therefore, always buy from a trusted source so you do not run into any criminal charges. You do not need a license or certificate to purchase red dyed diesel but to sell it, you must be certified.

I encourage you to check out this brochure from the IRS. It's full of great information and warnings about dyed fuel use.

If you'd like to learn more about the EPA's diesel fuel standards, you can click here or here.

Another great resource is the U.S. Department of Transportation's frequently asked questions page regarding fuel tax. If you have ever wondered why fuel is priced the way it is, this is a great place to start. You can find it here