Ultimate Guide to Off-Road Diesel for Commercial Businesses

Ultimate Guide to Off-Road Diesel for Commercial Businesses

Ultimate Guide to Off-Road Diesel for Commercial Businesses

For operators of off-road vehicles and cargo ships, non-taxable diesel fuel makes it possible to move across miles with significant reductions in operating costs. This stands in marked contrast to on-road vehicles with diesel engines, the drivers of which have been forced to cope with rising fuel costs and hefty tax rates.

In the farming, construction, factory, rail, and shipping industries, today's operators use nonroad, locomotive and marine (NRLM) diesel fuel, which is not subject to the taxes imposed on regular on-road diesel fuel. Thanks to these tax breaks, the companies that form these vital industries can produce and serve the marketplace with less costly overhead. When it comes to commercial products and services, the money saved on the operational end translates to reduced prices on the consumer front.

What Is Off-Road Diesel Fuel?

Off-road diesel is tax-exempt diesel fuel that is dyed for legal identification. Off-road diesel fuel is reserved for off-road vehicles, such as construction-site rolling stock. Dyed diesel fuel cannot be used for on-road commercial or passenger vehicles. State-licensed on-road vehicles with diesel engines are instead required to use clear diesel fuel.

In January 2017, the tax on diesel fuel for on-road vehicles increased from $0.8879 to $0.9879 per gallon. As such, the price of using diesel fuel can be costly for motorists who drive great distances over the course of a given day. A 10-gallon driving route for each day of the work week could add $200 to your monthly driving expenses if you drive an on-road vehicle with a diesel engine.

For industries such as manufacturing, farming, and construction, it is important to cut overhead costs as much as possible. Otherwise, the high costs associated with fuel are passed onto consumers for retail products and onto taxpayers for public works projects. With the designation of a non-tax diesel fuel specifically for these off-road industries, farmers and fleet operators can conduct business without the added expense of the fuel tax.

Off-road diesel fuel is strictly reserved for vehicles that do not operate on public roads and freeways. Commercial trailer-trucks that transport off-road vehicles to and from construction sites do not qualify for non-tax diesel fuel. Authorities are strict on enforcing these laws and impose steep fines and sometimes jail time for drivers who use red diesel fuel in on-road vehicles.

Off-Road Diesel Fuel

Tax Information About Off-Road Diesel

Diesel is made of unrefined crude oil, at least a fourth of which — roughly 27% — comes from overseas. Due to the global fluctuation of oil prices, the cost of diesel fuel ebbs according to political currents. Consequently, diesel fuel is typically expensive for on-road motorists. To lower fuel costs for off-road vehicles, the government has separated diesel fuel into taxable and tax-exempt categories. Each type of diesel fuel is distinguished by its color — taxable diesel fuel is clear and non-taxable is dyed red.

On farmlands and construction sites, non-taxable diesel fuel makes it possible to harvest crops and erect buildings with less financial burden. The benefits of non-taxable off-road diesel fuel have a trickle-down effect on consumers in the form of lower food prices and reduced costs for public works projects. The use of red diesel fuel in the shipping industry also helps to keep prices down on imported goods.

The high costs of fuel in today's global economy make it tempting for on-road motorists to use red diesel fuel. Contrary to popular belief, however, authorities can easily detect illegal use of off-road diesel fuel in on-road vehicles. At road stops, traffic authorities frequently use syringes to check the color of fuel in diesel engines. Investigators often employ a similar method on random commercial vehicles at weight stations and agricultural fairs.

If you are caught with red diesel fuel in an on-road vehicle, the penalty could range anywhere from $100 to $1,000 per gallon. Unlawful off-road diesel use can also result in high amounts of back-taxes owed to the IRS.

Comparisons to Other Forms of Diesel Fuel

Diesel fuels are dyed different colors for legal identification. There is no difference regarding fuel grade between clear and red diesel fuel, as dyes do not affect the ability of the fuel to perform in the engine of a vehicle. Both on-road and off-road diesel fuel contains a 2% bio-diesel mix with an ultra-low sulfur content of fewer than 15 parts per million.

On-road and off-road diesel fuel are each channeled through separate dispensaries and priced accordingly. Vehicles used for on-road purposes are required to access fuel from the properly designated dispensaries to ensure that taxes are paid on the fuel in question. Vehicles used for off-road purposes are authorized to access fuel from dispensaries that pump red-dyed, tax-exempt diesel fuel.

The use of red dye as a distinguishing factor makes it easy for authorities to tell the two fuel types apart from one another. Once the dye is added, the red tone becomes readily apparent to the naked eye due to the clarity of un-dyed diesel fuel. As such, authorities only need a small sample of fuel from an on-road vehicle to tell whether the proper fuel is being used by the motorist in question.

Who Should Use Off-Road Diesel Fuel

Due to the relatively high costs of fuel, it is important to use any tax advantages available when it comes to fuel. If you operate a fleet that qualifies for tax-free diesel fuel, the off-road vehicles should indeed be fueled with red diesel fuel. The difference in color between taxable and non-taxable fuel makes it easy to determine whether or not you are saving money with the type of fuel that is used in your vehicles.

Anyone who owns and operates vehicles that legally qualify for the use of off-road diesel fuel should take the option. The amount that you can save by using tax-free diesel fuel can add up quickly over the course of a typical year, especially if you consume vast quantities of fuel in a typical week.

Off-road diesel fuel is also an option that can save you money if you own and operate applicable machinery. For example, off-road diesel is used these days instead of heating oil in the storage tanks of residential heating systems. Off-road diesel is even used at amusement parks to fuel stationary rides such as roller coasters and Ferris wheels.

Amusement Park Off-Road Diesel Fuel

The Benefits of Off-Road Diesel

On a construction site, red diesel fuel can help you lower the costs of operating equipment over the course of a given project. On vehicles such as cranes, tractors, and backhoes, various mechanisms are liable to need maintenance due to the high-stress on vehicles at construction and demolition sites. Off-road diesel fuel relives some of the financial burdens by sparing your fleet of fuel taxation.

Similar advantages are gained on farmlands, where tax-free diesel fuel allows farmers to cultivate crops without the burden of fuel taxation. The money that you can save by using red diesel fuel frees up money for more crucial investments, such as the maintenance and upgrade of farming equipment. Moreover, the money that you can save by using non-taxable fuel amounts to savings that can be passed onto consumers.

Off-road diesel fuel is also advantageous for factory fleets. In a typical pressing plant, lifting and hauling vehicles drive up and down the factory floor throughout each shift to haul heavy products, parts and supplies from one station to another. At the end of each 12-hour period, such vehicles can easily drive many miles just by crossing the same floor back and forth. With tax-free diesel fuel, factory fleets can cut expenditures and redirect revenues toward other expenses, such as new and improved factory equipment, conveyor systems, air compressors, pneumatic tools and vehicles.

Common Industries and Projects That Require Off-Road Diesel

Industries that employ off-road vehicles use tax-free diesel to lower the cost of operations. Red diesel is generally used throughout the construction industry, where backhoes and lifting vehicles are employed to put heavy building pieces into place. Non-tax diesel fuel allows building firms to allocate construction budgets for more useful investments, such as newer and better equipment.

Red Diesel Fuel

Off-road diesel fuel is also used in the vehicles that tend construction sites. Cranes and bulldozers, for example, are powered with red diesel fuel. The cost for projects of this magnitude are brought down thanks to non-tax diesel fuel and these savings are passed onto local taxpayers and city councils.

In the shipping industry, off-road diesel fuel allows shippers to keep operations down in the import and export of goods. These savings are healthy for retailers and consumers alike. Across the retail industry, the lowered cost of importing goods allows shops to stock shelves with import items that would otherwise be costly to procure in significant quantities. For consumers, the low-cost of importing and product availability translates to lower prices.

As the per-gallon tax rate increases for on-road diesel fuel, the savings for non-taxable fuel are significant for the industries that qualify.

How to Get Bulk Off-Road Diesel Fuel

If you operate a fleet of off-road vehicles, the most economical way to procure supplies of off-road diesel fuel is to buy it in wholesale quantities. Along the mid-Atlantic, Shipley Energy is one of the prominent suppliers of wholesale off-road diesel fuel. We have been in the fuel business since 1929. Headquartered in York, Penn., we staff experienced fuel handlers who deliver off-road fuel by truck to customers located throughout the region.

When it comes to managing fuel costs, it is crucial to have experts on your side who can help you plan a fuel budget in advance of the next 12-month fiscal cycle. Our team at Shipley Energy has vast expertise in the area of fuel budgeting, having worked with numerous fleets of varying size over the past nine decades. Our experts can help you fuel up your fleet with a plan that will work most conveniently within the confines of your operating budget.

One of the best things about off-road fuel is the savings it brings to off-road and marine fleets. When you consider all the overhead costs involved in the daily operations of a fleet, the costs and calculations associated with fuel management can seem like an added headache. These are among the reasons why Shipley Energy has long maintained a company goal to help fleets budget effectively so that operators can focus their energy on the management of their fleets.

Of course, you need to have access to off-road diesel fuel to reap its financial benefits. We provide numerous ways to get the fuel you need when and where you need it. For starters, we have supply terminals at various spots along the mid-Atlantic. Moreover, Shipley Energy staffs a team of outbound fuel-delivery drivers who bring off-road diesel to customers in some of the more remote areas of New York, Pennsylvania, Maryland, Delaware, New Jersey, Virginia and West Virginia.

Bulk Storage Advantages and Needs

Off-road diesel fuel is also pumped into storage tanks and used to power heating systems in furnace-equipped buildings. However, today's diesel fuel is not the same thing as heating oil, and the big difference comes from the sulfur content. Heating oil has a sulfur content of 2,000 parts per million, whereas most states have enacted laws that limit off-road diesel fuel to less than 15 parts per million sulfur content. This is down from a high of 5,000 parts per million, which was typical before 1993 when the Environmental Protection Agency first began regulating sulfur levels. The purpose of this change is to reduce harmful emissions.

When it comes to the heating of buildings and residential properties, off-road diesel provides a cost-effective means for generating heat in times of cold weather. When used in backup emergency generators, however, diesel fuel must be used with special care.

Compared to the high-sulfur heating oil, low-sulfur diesel fuel is less stable in a storage setting. Therefore, diesel fuel must be stored correctly with the right balance of additives when used for heating systems. At Shipley Energy, we have a team of commercial-energy experts who can guide you on how to utilize off-road diesel as heating fuel with utmost safety.

Off-Road Diesel for Businesses From Shipley Energy

If you own and operate off-road vehicles, there is no reason to use taxable, on-road diesel fuel. All the savings associated with off-road diesel translates to reduced fuel expenditures and increased resources for investments that are more beneficial to the growth of your business. Over the course of a year, the money you could save with tax-free fuel could be earmarked instead for newer vehicles and more advanced types of operating equipment, for example.

Tax-Free Off-Road Diesel Fuel

At Shipley Energy, our team is ready to fulfill your off-road diesel needs. With fuel terminals at various locations along the mid-Atlantic, there are plenty of places where you can stop and fill up your engine with lower-cost fuel. In the more remote locations of the states we cover, you can even arrange for fuel to be delivered to you. We also provide diesel fuel for heating systems. Explore our website for more information and view our off-road diesel solutions today. If you have any questions, feel free to contact us.