Trump signs order allowing tax-free dyed diesel on highways
In short
President Donald Trump signed an executive order on Monday that temporarily allows off-road “dyed” diesel to be used for highway driving and defers the federal excise tax on that fuel through the end of the year, without interest or penalties. He signed it at a campaign rally in Nebraska, saying it would cut costs for truckers and farmers as diesel prices sit near record highs. Gulf Oil analyst Tom Kloza called the measure “a cosmetic gesture” that he does not expect to move the overall price much.
Read the full story 3 min read
President Donald Trump signed an executive order on Monday that temporarily allows off-road “dyed” diesel to be used on highways and defers the applicable federal excise tax on that fuel, according to Bloomberg, The Hill, The New York Times, CNN and the White House. The White House said the deferral runs through the end of the year without interest or penalties, and that the order directs the Treasury secretary, in consultation with the defense secretary, to defer payment for on-road use of dyed diesel and to “explore pathways to eliminate the obligation to pay the deferred taxes.” [ 5 , 6 , 9 , 10 , 11 ]
Trump signed the order at a campaign rally in Nebraska for Sen. Pete Ricketts and Gov. Jim Pillen, calling it “a historic executive order to officially waive the off-road requirement, and allow anyone to purchase tax-free red dyed diesel for any reason.” He told the crowd, “So Pete and Jim, this should absolutely assure your election,” according to The Hill. The New York Times described dyed diesel as primarily used in agricultural and construction machinery; CNN noted it is the same as regular diesel, untaxed and dyed red to mark it for off-road use. [ 8 , 10 , 11 ]
The White House said the measure addresses fuel affordability for “American consumers, farmers, truckers, and workers” and follows what it called historic efforts on fuel affordability, citing “ongoing global conditions affecting the supply of diesel.” Trump said after signing that the order would also “drive down the costs of all goods, including groceries,” according to CNN. The White House said the order also instructs administration officials to encourage more states to adopt similar policies and to ensure farmers have access to dyed diesel. [ 6 , 11 ]
The move comes as diesel prices are near record highs. The Hill reported that diesel averaged about $6.32 per gallon on Monday, citing AAA, and that the administration had been expected to announce a directive increasing the availability of red-dyed diesel, along with a Treasury Department review of diesel taxes during the Nebraska speech. Bloomberg reported earlier in the day that Trump was preparing the step as a way to pare costs for the fuel ahead of November's midterm elections. [ 1 , 5 , 8 ]
Not all reaction was positive. Tom Kloza, chief oil analyst at Gulf Oil, told The Hill ahead of the announcement that he does not expect broader availability of red-dyed diesel to make a significant difference in the overall price. “This is really a cosmetic gesture,” Kloza said. “This really is a Band-Aid where a tourniquet would be more appropriate.” He said the quantity of diesel released would not be enough to supplant barrels lost, particularly in the Russia-Ukraine war as Ukraine targets Russian oil refineries. [ 8 ]
Outlets differed on what drove the diesel spike. CNN cited the war in Iran, amplified by attacks on Russian refineries and export restrictions in China. The Hill cited the Russia-Ukraine war and Ukrainian strikes on Russian oil refineries. Bloomberg, in its first report of the day, referred only to ongoing global conditions affecting diesel supply. [ 1 , 8 , 11 ]
As of CNN's report, the executive order itself had not been released, and Bloomberg said details were still forthcoming. Reuters reported at 16:40, citing sources, that the order was coming, and confirmed at 20:11 that it had been signed. [ 2 , 4 , 7 , 11 ]
Why it matters
The order is aimed at fuel costs for truckers, farmers and other diesel users, a politically sensitive expense ahead of November's midterm elections. Whether it lowers prices at the pump is disputed: the White House frames it as temporary relief tied to global supply conditions, while an industry analyst cited by one outlet said the volume involved is too small to replace lost barrels. The order's text has not been released, leaving the full scope of the tax deferral and any state follow-on unclear.
Key facts
- President Donald Trump signed an executive order on Monday easing restrictions on tax-exempt red-dyed diesel. [ 5 , 7 , 8 , 10 , 11 ]
- The order temporarily allows off-road dyed diesel to be used for highway driving. [ 6 , 9 , 10 , 11 ]
- It defers the applicable federal excise tax on that fuel through the end of the year, without interest or penalties. [ 6 , 9 , 11 ]
- Trump signed the order at a campaign rally in Nebraska for Sen. Pete Ricketts and Gov. Jim Pillen. [ 8 , 10 , 11 ]
- Red-dyed diesel is the same as regular diesel, dyed red to mark it as untaxed and intended for off-road use such as farm and construction equipment. [ 2 , 8 , 10 , 11 ]
- The Hill reported diesel averaged about $6.32 a gallon on Monday, citing AAA. [ 8 ]
- Gulf Oil chief oil analyst Tom Kloza told The Hill he does not expect broader availability of red-dyed diesel to make a significant difference in the overall price. [ 8 ]
- The executive order had not been released as of CNN's report, and Bloomberg said details were still forthcoming. [ 2 , 11 ]
Confirmed by several sources
- Trump signed an executive order on Monday easing limits on tax-exempt dyed diesel. [ 5 , 7 , 8 , 10 , 11 ]
- The order temporarily opens highway use of off-road dyed diesel. [ 6 , 9 , 10 , 11 ]
- The order defers the federal excise tax on that fuel through the end of the year without interest or penalties. [ 6 , 9 , 11 ]
- The signing took place at a campaign rally in Nebraska. [ 8 , 10 , 11 ]
- Red-dyed diesel is regular diesel dyed red to signal it is tax exempt and is typically used off-road, including in farm and construction equipment. [ 2 , 8 , 10 , 11 ]
Still unclear
- The text of the executive order has not been released. CNN reported the order “has not been released yet,” and Bloomberg said details were still forthcoming; the White House fact sheet and statement describe the measure but do not publish the order.
- Whether the change will meaningfully lower diesel prices. The only analyst quoted, Tom Kloza of Gulf Oil, told The Hill the move is “a cosmetic gesture” and a “Band-Aid,” while the White House says it lowers costs; no other document quantifies the price effect.
- What caused the diesel price spike. CNN attributed it to the war in Iran, amplified by attacks on Russian refineries and export restrictions in China, while The Hill cited the Russia-Ukraine war and Ukrainian targeting of Russian oil refineries; the outlets do not agree.
- A Treasury Department review of diesel taxes. The Hill said Trump was “expected to announce” it during his Nebraska speech, and no document confirms it was announced.
- How much diesel the order makes available. Kloza told The Hill the quantity released would not be enough to supplant lost barrels, but no document gives a volume figure.
What local media are saying
Timeline, local time
- Bloomberg reports Trump is preparing to ease limits on a tax-exempt variety of diesel, framing it as a bid to pare fuel costs ahead of the November midterms. [ 1 ]
- Bloomberg reports the administration is expected to lift restrictions on so-called red dyed diesel, usually used in farm equipment, with details still forthcoming. [ 2 ]
- Reuters reports, citing sources, that Trump will issue an order expanding access to tax-exempt diesel fuel. [ 4 ]
- Bloomberg reports Trump signed an executive order on Monday easing restrictions on the tax-exempt diesel variety to curb costs. [ 5 ]
- The White House fact sheet says the order temporarily allows off-road “dyed” diesel for highway use and defers the applicable federal excise tax. [ 6 ]
- The Hill reports Trump announced the steps at a Nebraska rally, quoting him on signing “a historic executive order,” and notes diesel averaged about $6.32 a gallon Monday per AAA. [ 8 ]
- The White House says the order defers the federal diesel tax on the fuel through the end of the year, with no interest and no penalties. [ 9 ]
- CNN reports Trump signed the order late Monday in Nebraska and that the document has not been released yet. [ 11 ]