Trump temporarily expands use of red-dyed diesel. Will it lower costs?
Summary
President Donald Trump issued an executive order allowing drivers to use red-dyed diesel fuel on highways temporarily. This fuel is usually for off-road use and is cheaper because it avoids federal taxes, but experts doubt this order will lead to large cost savings for most users.Key Facts
- Red-dyed diesel is normally used for off-road vehicles like farm and construction equipment and avoids a federal tax of 24.4 cents per gallon.
- The executive order waives the off-road requirement temporarily and lets anyone buy red-dyed diesel tax-free for on-road use until the end of 2026.
- The federal excise tax on red-dyed diesel is deferred, not eliminated, meaning users might owe taxes later.
- Diesel prices are currently high, with a national average of $6.32 per gallon, up from $3.76 before the war in Iran.
- Some states still ban the use of red-dyed diesel on highways, which could cause confusion and enforcement problems.
- Many truckers and farmers may not benefit much because of state bans or existing tax exemptions for farmers.
- The order does not address the main cause of high diesel prices, which is a limited diesel supply.
- Experts say the order might help a few users but will not provide widespread relief or significantly lower diesel costs.
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