President Donald Trump Monday signed an executive order that allows truckers and others to temporarily use red-dyed diesel, which is normally allowed only for off-highway agricultural and construction use.
A statement from the White House blamed "elevated diesel prices and tightened global supply" on the Russia-Ukraine war and a lack of refining capacity around the world. Ukraine has waged relentless drone attacks on Russian refineries.
However, most energy analysts also cite the U.S.-Iran conflict as contributing to the rise in diesel prices.
The White House claims allowing truckers to use red-dyed diesel -- which is exempt from federal excise taxes -- will save them $100 on each fill-up.
Trump's order expires on Dec. 31.
However, the reaction from one trucking association says Trump's executive oder "will provide minimal relief."
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Trump signed the order and made an announcement while at a rally for Republican candidates in Nebraska. When announcing the executive order, CNN reports Trump said, "“For many years, farm vehicles, construction equipment and other off-road vehicles have used what’s known as red-dyed diesel. You know what that is? I don’t know what the hell it is, but whatever it is, it is supposed to be very good,” before adding it’s “exactly the same as normal diesel.”
AAA reports today's national average for on-highway diesel is $6.31 per gallon, down about a penny from yesterday's price.
Red dyed diesel is tex exempt, while the federal tax on normal diesel is 24.4 cents per gallon.
Trump's executive order does not mean truckers using dyed diesel are completely exempt from paying that federal tax. It only delays it.
Ttump's order says, "The Order directs the Secretary of the Treasury, in consultation with the Secretary of War, to defer payment of the Federal excise tax imposed for on-road use of dyed diesel fuel for the remainder of the year without interest or penalties, and to explore pathways to eliminate the obligation to pay the deferred taxes."
The order also directs the Secretary of the Treasury to issue guidance implementing the order within five days, and to explore avenues, including legislation, to eliminate the deferred tax obligations entirely.
Trump's order comes at the same time several state have already taken action to allow truckers to use red-dyed diesel.
Early reaction from the trucking community is not favorable to Triump's executive order."
“Truckers are feeling the pain at the pump," said Todd Spencer, President & CEO, Owner-Operator Independent Drivers Association. "Every $1 increase per gallon in fuel costs our members around $400 more per week, and sustained high prices will put many truck drivers out of business. Meanwhile, oil executives pad their profits while working families struggle. Consumers also pay the price. Roughly 70% of domestic freight moves exclusively by truck, and the cost of fuel ultimately gets passed on. OOIDA believes allowing the wider use of red-dyed diesel will provide minimal relief. Market stability is essential to bring down costs for the long haul.”
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