President Donald Trump signed an executive order Monday aimed at helping bring down sky-high diesel prices by allowing anyone to buy tax-exempt “red dye” diesel.
“Tonight, I will sign a historic executive order to officially waive the off-road requirement and allow anyone to purchase red-dye diesel tax-free for any reason,” Trump said at a rally in Nebraska after telling the audience he didn’t “know what red-dye diesel is.”
Taxes on diesel depend on how it is used. On-road diesel intended for long-haul transportation is subject to federal and state taxes. But diesel for agricultural vehicles and machinery is generally exempt from tax and dyed red, so regulators and inspectors can distinguish it from road diesel.
A White House fact sheet on the order says Trump directed the secretaries of Transportation, Agriculture, Defense and Treasury to work to expand access to tax-exempt diesel and encourage states to suspend their taxes on diesel.
Diesel fuel prices have skyrocketed due to the war in Iran, but dyed diesel fuel is cheaper because it is exempt from federal and state excise taxes.
Trump said the order would save typical truckers more than $100 every time they fill up their tanks and reduce costs on other products, including groceries.
Trump made the announcement at a rally in Nebraska, a reliably Republican state, where Republican Sen. Pete Ricketts faces a surprisingly strong challenge from independent Dan Osborn.
Osborn is one of several Senate candidates who could flip seats long held by Republicans. This year, voters in both parties cite high gas prices and the rising cost of living as their top issues.
In this frustrated, anti-current environment, the Trump administration has come under intense pressure from Republican candidates to do something, anything, in response to diesel prices that have risen more than 30% in recent months.
Diesel hit a record price on Sept. 22 of $6.52 per gallon, according to AAA data. Since then, average prices have fallen slightly.
But overall, since the start of the war in Iran on February 28, the price of a gallon of diesel in the United States has increased by more than 70%.
The price rise is far greater than the nearly 45% rise in the price of Brent crude oil and the 50% rise in unleaded gasoline prices over the same period.
While the war in Iran has disrupted oil shipments across the Middle East, it is the recent escalation of the war in Ukraine that has put U.S. diesel prices on a different path than other energy products.
Ukraine’s successful targeting of Russian oil refineries with drones has forced the Kremlin to ban diesel exports at least until the end of this month.
In an effort to slow rising prices, Transportation Secretary Sean Duffy announced last month that the Department of Transportation would relax rules governing the number of consecutive hours fuel truck drivers can work. The temporary adjustment is expected to last 90 days.
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