I am trying too figure why is my lips so dry, white and flaky but red around my mouth.

If it's lip eczema, Persistent chapped lips can be lip eczema, which may be treated like skin eczema, using hydrocortisone cream (twice a day for 1 week) plus Vaseline or Aquaphor to retain moisture. Sometimes lip balm or lip sunscreen chemicals cause an allergic reaction. Other times, a person is a primary lip-licker (it's his habit). Once cracked, lips get irritated by routine foods and juices. A doctor can help.
DRY AND FLAKY LIPS. FLAKY LIPS CAN DEVELOP FROM USING CERTAIN SOAPS, LIPSTICKS, KISSING SOMEONE WITH A HEAVY BEARD, FROM EATING HOT OR SPICY FOODS, AND MUCH MORE. KEEP A DIARY TO FIND WHICH THE CULPRITS MAY BE. MANY OVER THE COUNTER LIP BALMS ARE HELPFUL. THE RED AROUND YOUR MOUTH MIGHT BE DUE TO THE CONTRAST BETWEEN YOUR NORMAL SKIN AND YOUR LIPS OR IT COULD BE PART OF THE SAME CAUSES LISTED ABOVE.