Trump’s Executive Order to Ease Diesel Prices

President Trump has implemented a new executive order aimed at assisting farmers and truckers by providing immediate relief from soaring diesel prices. This order permits the use of tax-free dyed diesel, typically reserved for off-road vehicles like tractors and combines, for on-road travel. From October 5 through December 31, both truckers and farmers are allowed to use dyed diesel on highways, deferring the federal excise tax of 24.4 cents per gallon without any interest or penalties.

Additionally, the order instructs Treasury Secretary Scott Bessent to examine ways to potentially eliminate the obligation to pay these deferred taxes. Secretary Bessent has demonstrated considerable creativity in previous situations, which suggests he might find viable solutions.

There’s a common misconception that dyed diesel differs from on-road diesel, but that’s not true. Chemically, they are identical, offering the same emissions profile and fuel efficiency for transportation. The IRS uses Solvent Red 164 dye as a marker, making it easy for inspectors to identify vehicles that haven’t paid the road tax. For a typical 250-gallon fill-up, this federal tax amounts to approximately $60, not including state taxes. So, the dye isn’t really about pollution—it’s about maintaining the Highway Trust Fund.

Trump is also urging state governments to suspend their own diesel excise taxes for the remaining months of the year. In high-tax states, like California and Illinois, these taxes can further inflate diesel prices by 48 to 60 cents per gallon, and that’s before state sales taxes are factored in.

Breaking it down a bit—when you add the federal tax to what’s imposed by state governments in those higher-tax areas, the savings can be significant. A small carrier operating a few trucks or a custom harvester filling up during harvest season can feel the pinch week after week. It’s frustrating for farmers who already purchase dyed diesel for their machinery but then have to pay more at the local truck stop for the same fuel minus the dye.

However, this order doesn’t address the underlying supply issues that caused the price spikes initially. There is also no commitment to accelerating solutions for the ongoing conflicts in Ukraine and the Middle East, nor does it facilitate the construction of new refining capacity. Moreover, state governors, particularly in blue states, can continue enforcing strict regulations that could hinder existing refineries, potentially leading to further shutdowns.

There’s also no provision urging EPA Administrator Lee Zeldin to reconsider the Renewable Fuels Standard (RFS), a policy that adds an additional 24 cents to fuel costs, according to government data. The political hesitation to challenge the RFS stems from the agricultural lobby, which, despite calling for fuel price relief, fiercely defends this very regulation.

It’s puzzling, really.

Let’s not overlook the timing of this order, which seems to coincide quite conveniently with the upcoming November elections. Fuel prices are a major concern for voters—not only do they impact gas station receipts, but they also indirectly raise grocery prices.

With the Republicans working to maintain slim majorities in Congress, allowing diesel prices to linger above six dollars without any intervention would have been a considerable mistake. It would only serve to remind voters that action wasn’t taken during a crisis.

Farmers and truckers are perfectly aware of their need for relief, even if some issues are, at least in part, of their own making. What they really want is a simpler bottom line. For the next eleven weeks—or even longer if Bessent’s creativity pays off—Trump’s order on dyed diesel aims to provide just that.