Trump’s Dyed Diesel Order Provides Common Sense Relief, For Now

President Donald Trump signed a new executive order on Monday designed to provide immediate, direct relief from high diesel prices for farmers and truckers. The order allows for the on-road use of tax-free dyed diesel that is normally reserved for off-road use in vehicles such as combines and tractors. Effective from Oct. 5 through Dec. 31, truckers and farmers can burn dyed diesel on the highways with the 24.4 cents-per-gallon federal excise tax deferred. No interest, no penalties. 

And it gets better: The order also directs Treasury Secretary Scott Bessent to “explore pathways to eliminate the obligation to pay the deferred taxes.” As the Iranian regime has found out the hard way in recent months, Secretary Bessent has proved to be extremely creative when it comes to exercising his discretion.

Many believe dyed diesel is a different product from on-road diesel, but this is a myth. The products are chemically the same, have the same emissions profile, and provide the same mileage when used in transportation. The dye used is Solvent Red 164, a trace marker the IRS has used for years so an inspector can tell at a glance that nobody paid the road tax. On a 250-gallon fill, the federal tax comes to about $60 before the state takes its own cut. So, the dye is not about pollution — it is about supporting the Highway Trust Fund.

Trump also urges state governments to suspend their own excise taxes on diesel for the final three months of the year. In high tax states like California, Illinois and Indiana, those taxes add another 48 to 60 cents per gallon of diesel, and all that is before state sales taxes kick in. 

Here’s where we do the math the like a fleet manager does it. Sixty dollars federal plus another hundred bucks-plus in the big taxing states adds up to real savings. A small carrier with six trucks or a custom harvester topping off every night during wheat harvest season feels it hard by the end of each week. Farmers are already buying dyed diesel for their tractors — the insult for them is paying up again at the local truck stop for identical fuel without the dye.

Of course, nothing in this order fixes the supply problem that created the price blowout to begin with. Nothing in it will hasten ends to the wars in Ukraine and the Middle East. Nothing in it will help speed the building of much needed new refining capacity in the United States or impede blue state governors like California’s Gavin Newsom from directing their regulators to force existing refiners to close up shop with increasingly onerous regulations. 

Nor is there anything in this order demanding EPA Administrator Lee Zeldin take a hard look at suspending or — even better — rescinding the ridiculous Renewable Fuels Standard (RFS). That counterproductive policy also adds 24 cents of cost to a gallon of fuel according to the government’s own data, but no politician wants to touch it. That’s because the very same farmer’s lobby screaming now for fuel price relief is a fierce protector of the RFS. 

Someone make it make sense, please.

Make no mistake about it, Nov. 3 is the other reason this order landed when it did. Fuel prices are not a debate topic in a midterm election. They are the number on the pump and the hidden cost in everyone’s grocery bill.