Trump signed the order on stage during an election rally in ‌Nebraska, ⁠saying the directive will waive off-road requirements ⁠and allow anyone to purchase tax-free ⁠so-called red dye ⁠diesel.

The move will temporarily allow truckers and farmers to use red-dyed diesel, exempt from highway fuel taxes. The Republican administration has also deferred related taxes on the fuel through the end of this year.

Farm equipment, construction machinery, trucks, and other off-road vehicles in the United States use tax-free diesel. When it comes to selling diesel for highway transportation, the commodity gets exempt from a 24.4-cent-per-gallon tax.

While the practice of using dyed diesel in vehicles operated on public roads has been considered illegal, amounting to tax evasion, several states this year have relaxed restrictions on the commodity to help Americans cope with surging fuel prices amid the ongoing Iran war.

The US national average price of diesel topped USD 6 a gallon in September for the first time ever, due to the supply disruptions triggered by the conflicts in Ukraine and Iran pushing up transportation costs across the country.

The rising fuel price has emerged as one of the key election topics ahead of the midterms, with Americans reportedly spending about USD 700 million more on a daily basis on gas and diesel than they did a year ago, a development that was also confirmed by Bob McNally, president of Rapidan Energy, during an interaction with CNBC.

As per the White House, truckers could save more than USD 100 per fill-up post Trump’s signing of the executive order.

The order also directed the Treasury secretary, in consultation with the Department of Defense, to defer collection of the federal excise tax on highway diesel through the end of 2026, without interest or penalties, according to a fact sheet released by the White House.

The Treasury has also been asked to “explore pathways to eliminate the obligation to pay the deferred taxes” altogether.

The Trump administration has cited a tight global supply tied to the Ukraine war, along with a lack of refining capacity, as the factors pushing up diesel prices and household costs.

The Group of Seven (G7) nations last week agreed to release 100 million barrels of diesel and crude reserves after Trump escalated the pressure by threatening an export ban on the commodities.

Talking about the high fuel prices becoming a key election issue, Democratic lawmakers from northeastern US states have urged Energy Secretary Chris Wright to ‌take action to cut soaring heating oil costs while blaming President Donald Trump for his campaign against Iran and other administration lapses behind the phenomenon.

Led by Senator Elizabeth Warren of Massachusetts, the lawmakers said in a letter dated September 6 that heating oil prices were about 60% higher than before the geopolitical conflict and that American families could pay roughly USD 600 more to heat their homes this winter.

While noting that heating oil and diesel are fuels produced from the ⁠same refining stream, meaning tight supplies and higher parent fuel prices can also boost heating oil costs, the lawmakers cited New England as an example, where about one-third of homes use heating oil, with the share reaching about half in some other states.

The lawmakers said the closure of the Strait of Hormuz, low fuel inventories, and strong exports have contributed to higher heating oil and diesel prices. They asked Wright to support an end to the conflict, restore energy assistance, and reverse cuts ⁠to clean energy and grid upgrades.

“We urge you to support an immediate end to the war and to stop blocking or restricting Department of Energy programs that would help American families lower their energy bills,” the lawmakers wrote.

Image Courtesy: White House

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