Trump waives red-dyed diesel restrictions to combat rising fuel costs

President Donald Trump has signed an executive order allowing the highway use of tax-exempt red-dyed diesel through the end of 2026 to mitigate record-high energy prices.

The executive order, signed Monday evening, permits truckers and farmers to use red-dyed diesel on public roads. International reported that this fuel is typically reserved for off-road machinery, such as construction and farm equipment, and is exempt from a 24.4-cent-per-gallon federal highway tax. Feeds noted that while federal rules have been waived through 2026, concerns remain regarding local taxes and other regulations.

International reported that the Treasury secretary has been directed to defer the collection of the federal excise tax on highway diesel without interest or penalties. The administration is also exploring ways to eliminate the obligation to pay these deferred taxes entirely. The White House estimated that the move could save truck drivers more than $100 per fill-up.

The policy change comes as the national average price of diesel topped $6 a gallon in September for the first time ever. The International homepage noted that surging prices are putting pressure on the president and the Republican Party four weeks before midterm elections. International attributed the spike to refining capacity shortages and supply disruptions linked to conflicts in Ukraine and Iran.

To further address supply issues, the Group of Seven nations agreed to release 100 million barrels of diesel and crude reserves. International reported that this agreement followed pressure from President Trump, who had considered a ban on U.S. fuel exports. Currently, Americans are spending approximately $700 million more per day on fuel than they were one year ago.

Background

Using dyed diesel in vehicles on public roads is traditionally illegal and can result in fines for tax evasion. According to International, several states had already relaxed restrictions on the fuel earlier this year as prices began to surge.