President Donald Trump signed an executive order on Monday that temporarily lets drivers buy and use tax-exempt, red-dyed diesel on public roads, a move aimed at easing near-record fuel prices linked to the war in Iran, the White House said.
Dyed diesel is normally restricted to off-road use such as farm and construction equipment and is exempt from federal and state excise taxes. The order waives the off-road requirement and defers the applicable federal excise tax through the end of the year without interest or penalties, according to a White House fact sheet. Media reports said the adjustment is set to last 90 days.
Trump announced the step at a campaign event in Nebraska, a state hit hard by the price spike, and said truckers would save more than $100 on each fill-up, with knock-on benefits for grocery costs. He also joked that he did not know what red-dyed diesel was, adding that it was the same as regular diesel.
The order directs the transportation secretary to work with states, industry and labour groups on access to dyed diesel. It tells the agriculture secretary to make sure farmers can obtain it in high-demand areas and to press states to take similar action. News reports said the defence and Treasury secretaries are also tasked with expanding access and encouraging states to suspend their own diesel taxes.
Diesel averaged $6.53 a gallon at its record on Sept. 22, up from $3.76 before the Iran war, according to AAA. Prices have since eased by about 20 cents but remain up roughly 77% this year, on course for the largest annual percentage gain since AAA began tracking in 2000.
Patrick De Haan, head of petroleum analysis at GasBuddy, said the order would not significantly move prices. Ten states that already allow similar relief account for about a third of U.S. diesel sales, according to CNN.
The White House also pointed to other steps, including a Transportation Department waiver of hours-of-service rules for drivers hauling fuel, and an agreement it said Trump reached with Europe to release 100 million barrels of refined diesel from strategic reserves over the next four months. It is not clear how long the dyed-diesel policy will stay in effect. Trump said he hoped it would not be needed for long because prices were falling.
The White House attributed elevated prices to the Russia-Ukraine war and limited global refining capacity, while media reports tied the surge to the conflict involving Iran.
