President Donald Trump signed an executive order onstage in Grand Island, Neb., that temporarily allows red-dyed diesel on public roads and defers the federal excise tax normally owed on highway fuel through Dec. 31.
Trump said at the rally, 'I don’t know what the hell it is, but whatever it is, it’s supposed to be very good.' The order directs the Treasury Department to defer payment without interest or penalties, and to explore ways to eliminate the deferred bill entirely.
The federal diesel tax is 24.4 cents per gallon, according to the U.S. Energy Information Administration. That includes a 24.3-cent excise tax and a 0.1-cent 'Leaking Underground Storage Tank' fee. On a 250-gallon fill-up for an 18-wheeler, that works out to about $61.
The White House said truckers will save more than $100 per fill-up, but that assumes states also suspend their own diesel taxes. The order encourages that, but cannot require it.
Fortune quoted Alan Krupnick, a senior fellow at Resources for the Future and director of its Industry and Fuels Program, saying red-dyed diesel is 'the same as regular diesel, but dyed red so inspectors can make sure it’s being sold only for off-road uses.' Gilbert Metcalf, a visiting professor at the MIT Sloan School of Management and a former deputy assistant secretary at the U.S. Treasury Department, said it is 'the same diesel that you can buy at a gas station; it just has red dye in it.'
Metcalf said the order would not meaningfully change supply. 'I don’t see this having really any impact on supply,' he said. 'There’s no ability to process more or create more diesel.' He added that shifting some diesel into road use could make it 'more expensive for farmers and other off-road use, like construction.'
Diesel prices have been elevated, with the national average around $6.20 a gallon the week of Oct. 5, down from a peak of roughly $6.53 in late September, according to the EIA. Before the U.S. and Israel launched their war against Iran in late February, the national average was about $3.76, according to AAA.
The market has already voted. A 24.4-cent deferral is not a real supply-side fix, and it does not change the pressure from near-record refinery utilization or from the global conflicts weighing on fuel. Capital rewards clear rules, not temporary accounting tricks that may leave the taxpayer with a deferred bill and farmers with a tighter squeeze.
