American drivers will get broader access to so-called red-dyed diesel, which is laden with fewer taxes, making it more affordable, after President Trump signed an executive order to that effect late on Monday.
“The order temporarily opens highway use of tax-free dyed diesel, deferring the federal diesel tax on that fuel through the end of the year — no interest, no penalties,” the White House said in a news release.
Federal diesel tax stands at $0.244 per gallon, or some $60 on a 250-gallon fill, according to the White House release. “Where states match this federal action, savings will top $100 per fill — a real difference for the hardworking Americans who haul the freight and grow the food,” the release also said.
“This order will also drive down the costs of all goods, including groceries,” President Trump said at a rally in Nebraska, as quoted by CNN, explaining that his executive order will “allow anyone to purchase tax-free red-dyed diesel for any reason.”
Red-dyed diesel is used in agriculture and construction, among other industries. Also called off-road diesel, the fuel is literally dyed red to distinguish it from the diesel sold for broad use. The red-dyed fuel is not subject to the federal excise duty and, as such, is cheaper than its broad-use version. Some analysts, however, do not believe the excise tax relief would make much of a difference for drivers in terms of affordability.
Diesel prices remain a hotspot of financial pain for Americans—and other nations around the world—due to the severely tightened supply after war-related refinery outages in the Middle East and Russian refinery damage resulting from Ukrainian drone attacks.
The price of diesel surged above $6 per gallon last month and, as of October 5th was still elevated, at $6.3207 per gallon, according to AAA. This was, however, a slight decline from the all-time high of $6.53 per gallon in late September.
By Irina Slav for Oilprice.com
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