Trump opens access to cheaper diesel amid record prices in US

US President Donald Trump signed an executive order temporarily allowing broader on-road use of red-dyed diesel fuel, intended primarily for agricultural and other off-road equipment. The administration hopes this will reduce costs for carriers and farmers amid near-record diesel prices.

The so-called red-dyed diesel does not differ in its characteristics from regular road diesel. The red dye is used to identify fuel that is usually not subject to federal excise tax because it is intended for tractors, construction equipment, and other machines that do not travel on public roads.

The order instructs the US Department of the Treasury to determine within five days the possibility of deferring federal excise tax for such fuel. If the relief is applied, tax liabilities arising from October 5 through December 31, 2026, may be postponed without penalties or interest. The Treasury is also tasked with exploring the possibility of fully waiving the deferred payments.

The federal excise tax on road diesel is 24.4 cents per gallon. According to the White House estimate, for a standard truck fill-up of about 250 gallons, the federal relief alone saves about $60, and if states take similar steps, the savings could exceed $100 per fill-up.

The decision was made after a sharp increase in diesel fuel prices in the US. According to AAA, on October 5 the national average diesel price was about $6.32 per gallon. The record high of $6.53 was set on September 22. For comparison, a year earlier diesel averaged about $3.69.

According to CNN, the sharp price increase is primarily due to reduced global refining capacity and fuel supply disruptions. The situation has been affected by the war in the Middle East, strikes on Russian refineries, and export restrictions from China. American refineries are operating at high utilization but have not yet been able to fully compensate for the global market shortage.

Experts quoted by CNN note that the tax relief may give carriers short-term savings, but it does not address the main cause of high prices - a shortage of refining capacity and limited diesel supply on the global market.

Based on materials from: CNN, White House