Trump moves to cut diesel costs with order on tax-free fuel

WASHINGTON: US President Donald Trump on Monday (Oct 5) signed an executive order allowing drivers to use tax-exempt red-dyed diesel, a fuel normally reserved for farm machinery and other off-road equipment, on public roads.

The move came as surging pump prices tied to the Iran war weighed on Trump's Republican Party weeks before the US midterm elections.

Speaking at a rally in Nebraska, Trump told supporters the order would "officially waive the off-road requirement and allow anyone to purchase tax-free red-dyed diesel for any reason".

The president admitted he was unfamiliar with the fuel, joking to the crowd: "I don't know what the hell it is, but whatever it is, it's supposed to be very good."

Red-dyed diesel is essentially the same fuel as standard diesel, but it is exempt from highway fuel taxes.

A White House fact sheet released alongside the order described a more limited measure than the one Trump announced on stage.

Rather than scrapping the tax, the order instructs Treasury Secretary Scott Bessent, in consultation with Defense Secretary Pete Hegseth, to defer the tax owed on dyed diesel used on roads until the end of the year, without interest or penalties, and to look for ways to cancel the charges altogether.

The White House said federal authorities and state governors could use their discretion to halt inspections and waive the tax liability drivers would otherwise face.

The fact sheet made no mention of Iran, instead blaming the price surge on the Russia-Ukraine war and a global shortage of refining capacity.

It also accused Democratic-led states of closing refineries in the name of green energy policies.

Trump at the Nebraska rally also praised a deal struck with Europe this month to release 100 million barrels of refined diesel from strategic reserves over the next four months.

He had floated a ban on US exports of diesel, which powers trucks, farm equipment and construction machinery.

Diesel prices in the United States have hit record highs above US$6 a gallon in recent weeks, with export restrictions imposed by major supplier Russia after Ukrainian attacks on its fuel facilities adding to pressure on global markets.