Aiming at fuel costs, Trump opens tax-exempt ‘red dye’ diesel to all drivers

President Donald Trump signed an executive order Monday that is intended to help bring down sky-high diesel prices by allowing anyone to purchase tax-exempt “red dye” diesel.

“Tonight I’m going to sign a historic executive order to officially waive the off-road requirement and allow anyone to purchase tax-free red dye diesel for any reason,” Trump said at a rally in Nebraska after he told the audience he didn’t “know what the hell” red dye diesel is.

Taxes on diesel are based on how it is used. Road diesel meant for long-distance transport is subject to federal and state taxes. But diesel intended for farm vehicles and machinery is typically tax-free and dyed red, so regulators and inspectors can tell it apart from road diesel.

A White House fact sheet about the order said Trump has directed the secretaries of transportation, agriculture, defense and the Treasury to work on expanding access to tax-exempt diesel and encouraging states to suspend their diesel taxes.

Diesel fuel prices have spiked because of the war in Iran, but dyed diesel fuel is cheaper because it’s exempt from federal and state excise taxes.

Trump said the order will save typical truckers more than $100 every time they fill their tanks and drive down the costs of other goods, including groceries.

Trump made the announcement at a rally in reliably Republican Nebraska, where GOP Sen. Pete Ricketts faces an unexpectedly strong challenge from independent Dan Osborn.

Osborn is one of several Senate candidates who could flip seats long held by Republicans. Voters in both parties this year cite high gas prices and the rising cost of living as their top issues.

In that frustrated, anti-incumbent environment, the Trump administration has been under intense pressure from Republican candidates to do something, anything, in response to diesel prices that have risen by more than 30% in recent months.

Diesel hit all-time high price Sept. 22 of $6.52 per gallon, according to AAA data. Since then, average prices have declined slightly.

But all told, since the Iran war began Feb. 28, the price of a gallon of diesel in the U.S. has risen by more than 70%.

The surge in prices is far more than the almost 45% spike in Brent crude oil and the 50% spike in unleaded gas prices over the same period.

While the war in Iran has disrupted oil shipments across the Middle East, it is the recent escalation of the Ukraine war that set U.S. diesel prices on a separate path from other energy commodities.

Ukraine’s successful targeting of Russian oil refineries with drones forced the Kremlin to ban exports of diesel at least through the end of this month.

In a bid to slow rising prices, Transportation Secretary Sean Duffy announced last month that the Transportation Department would ease rules governing how many consecutive hours fuel truck drivers can work. The temporary adjustment is set to last 90 days.