Trump signs order allowing for wider use of dyed diesel amid soaring prices

U.S. President Donald Trump signed an executive order late Monday which allows for a wider use of dyed diesel on regular roads and highways across America, as consumers and businesses grapple with record-high fuel prices.

The move follows other states, including Texas, where a state of emergency was declared by Governor Greg Abbot in order to ease some restrictions on dyed diesel.

Trump signed the executive order from a rally stage in Nebraska. The high cost of diesel and other fuels is a risk to Republicans ahead of the Nov. 3 midterm elections in which control of Congress is at stake.

Dyed diesel is essentially regular diesel fuel that is dyed a reddish colour to identify it for exclusive off-road applications, like with tractors and farming equipment, and it’s comparably cheaper than regular diesel because it is exempt from most road and highway taxes.

Story continues below advertisement

Trump’s executive order allows for Americans to use dyed diesel to fill up trucks and other road vehicles that would normally have to fill up for a higher cost at truck stops.

The directive orders secretaries of the U.S. Treasury as well as the departments of transportation and agriculture to waive the off-road requirement for tax-free diesel and allow anyone to buy the red dye diesel fuel that is used by the agriculture industry and by some off-road vehicles.

Get daily National news

Get daily Canada news delivered to your inbox so you'll never miss the day's top stories.

The order also defers federal taxes normally required to clear dyed diesel for use on roads and highways for the remainder of the year without interest or penalties. It also states the measure will be used “to explore pathways to eliminate the obligation to pay the deferred taxes.”

It also directs the U.S. agriculture secretary to “ensure farmers’ access to dyed diesel in high-demand areas” while asking the transportation secretary to coordinate with states, industry leadership, and labour organizations on access to dyed diesel.

“We are not going to need it long, I hope,” Trump said of the waiver.

Story continues below advertisement

Easing restrictions on dyed diesel doesn’t lower diesel prices directly, but it is, generally, a cheaper version of the same fuel, and allowing for a wider use of it means businesses won’t have to pay some of the higher prices at pumps.

Diesel prices reached a record of roughly US$6.50 per gallon last month.

In Canada, the national average for diesel is about CA$2.50 per litre as of publication. Dan McTeague, president of Canadians for Affordable Energy, says the prices seen over the past few months are roughly double where they were last year, and could climb even higher unless various geopolitical tensions ease fast.

Prices for the fuel integral to trucking goods have risen in response to the U.S.-Israeli war on Iran and the Russian invasion of Ukraine, with the conflicts having led to attacks on refineries in the Middle East and Russia.

G7 countries announced last week that they would release 100 million barrels of diesel, after pressure from Trump who had considered banning U.S. exports of the fuel.

In Canada, the federal and some provincial governments have moved to ease some taxes on fuel in order to provide quick relief for consumers and businesses.

The federal government recently extended a pause on the fuel excise tax until the end of January 2027, which brought immediate relief at the pumps for both regular and diesel fuels as well as jet fuels when it was introduced earlier this year. The tax will then return at a 50 per cent rate from Feb. 1 through March 31, 2027.

Story continues below advertisement

Conservative Leader Pierre Poilievre has proposed eliminating all tax on diesel sales until at least Canada Day by extending the full fuel excise tax cut until July 1 of next year and removing the GST from the purchase of fuel.