President Donald Trump has issued an executive order temporarily allowing the use of red-dyed diesel on commercial roads, in a bid to mitigate rising diesel costs across the U.S.
The federal tax for normal diesel sits at 24.4 cents a gallon, adding roughly $60 to a 250-gallon fill. Red-dyed diesel — which is usually reserved for off-road construction vehicles and farm equipment — is tax-free, although it's typically illegal to use for any vehicles that operate on public roads. That's because using red-dyed diesel on public roads constitutes evasion of highway taxes, which pay for the construction and maintenance of public roads. The red color is added as a chemical and visual marker, letting law enforcement and inspectors easily identify tax-exempt fuel.
Trump says his executive order opens up the use of red-dyed diesel across all vehicle types for the remainder of the year, with the White House claiming that the exemption could save truckers more than $100 per fill.
However, whether those savings will actually be realized remains an open question. As GasBuddy's head of petroleum Patrick DeHaan notes, states have their own taxes and laws for dyed diesel, and Trump's executive order can't override those rules, as it only applies to federal taxes. That means that a trucker who fills up with dyed diesel in a state aligned with the executive order could risk a hefty fine when they cross into a state that still doesn't allow the fuel on public roads. Additionally, most major truck stops don't even sell dyed diesel, with the bulk of the fuel sold to farms and construction crews through suppliers or wholesalers.
"Big fleets will likely sit this out," DeHaan predicts. "The dyed diesel order may be a real change on paper, but the impact at the pump is likely to be limited and flat-out lumpy."
Trump's executive order fails to address the root cause of the recent spike in diesel prices, DeHaan adds, which is a lack of global supply driven by disruptions in the Middle East, strikes on Russian oil refineries, and declining global inventories. The White House also describes the federal diesel tax as "deferred," rather than eliminated, and the actual text of the executive order is hazy on whether that bill might come due for truckers down the road, stating only that the White House will "explore pathways to eliminate the obligation to pay the deferred taxes."
