Source: Fortune
Summary
President Donald Trump signed an executive order allowing red-dyed diesel on public roads and deferring the federal excise tax through December 31. The move aims to ease high diesel prices, which are impacting truckers and farmers. Red-dyed diesel is typically used for off-road purposes and is tax-free. Experts say the tax deferral may not significantly lower prices, as it does not address supply constraints. The order may also raise costs for off-road users who rely on the fuel.
Our Reading
The numbers tell one story.
Trump signs an order to defer diesel taxes, promising relief.
Experts say the move won’t fix supply issues.
Red-dyed diesel is now on public roads, but not for long.
The real problem isn’t the tax—it’s the global supply chain.
Author: Evan Null
What is red-dyed diesel?
Red-dyed diesel is the same as regular diesel but dyed red to indicate it’s for off-road use. It’s tax-free to help industries like agriculture. Inspectors use the dye to ensure it’s not used on public roads. The fuel is meant for tractors, construction equipment, and other non-highway vehicles.
How much could drivers actually save?
The federal tax on diesel is 24.4 cents per gallon. On a 250-gallon fill-up, that’s about $61. The White House claims truckers could save over $100, but that assumes states also suspend their own taxes. The actual savings are modest compared to current prices, which average around $6.20 per gallon.
Why economists say it won’t move prices
Economists argue that the executive order won’t change supply or demand. U.S. refineries are already operating at near capacity. The tax deferral only makes red-dyed diesel available for road use, not increasing the total amount of diesel in the market. This means the order doesn’t address the root causes of high prices.
Could farmers end up paying more?
Shifting red-dyed diesel to road use may lower on-road prices but increase costs for off-road users like farmers. These users rely on the tax-free fuel for equipment. The order doesn’t provide them with new benefits, and it could make their fuel more expensive if demand shifts.
What’s driving diesel prices?
Diesel prices have risen due to global conflicts, including the war with Iran and the Russia-Ukraine war. These events have disrupted supply chains and limited global diesel availability. U.S. refiners are already running at full capacity, leaving little room for increased production. A return to stability in global markets is needed to lower prices.
