President Donald Trump signed an executive order on Monday allowing the use of tax-free dyed diesel on the road through the end of the year, in a move that should bring down soaring gas and diesel prices as the midterms quickly approach. "Tonight, I am 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 while speaking at a campaign event in Nebraska. But some analysts are skeptical that this temporary expanded use of dyed diesel—also known as red diesel, which is typically sold tax-free for off-road vehicles—will benefit all American drivers.
"The dyed (red) diesel order sounds big, but most drivers won't benefit," Patrick De Haan, the head of petroleum analysis at GasBuddy, wrote on social media. "States still enforce their own rules, it's not truly tax-free, and it doesn't add a single gallon of supply." "It probably won't do a whole lot, really," Gregory Ibendahl, an agricultural economist at Kansas State University, told The New York Times, adding that "something big" is needed "to get the prices back where they were before the Iran thing started." He specified that taxes are not the problem. As of Tuesday morning, the national average diesel price was $6.31 per gallon, up from $3.68 per gallon a year ago, according to the American Automobile Association (AAA).
Compared to the days before the Iran war began on February 28, causing the disruptions in global oil supply that have driven up energy prices across the world, it is up by more than $2.5 per gallon. The highest diesel prices were in California, where drivers paid a statewide average of $8.36 per gallon. Prices were above $7 per gallon in two other states: Washington ($7.33) and Hawaii ($7.22).
Drivers in Texas ($5.73), Georgia ($5.80) and Oklahoma ($5.81) paid the lowest diesel prices in the nation. The national average gas price on the same day was $4.37 per gallon, up from $3.13 per gallon a year ago. Before the U.S. and Israel launched joint strikes on Iran, gas prices had been falling for weeks, dipping to $2.98 per gallon and allowing the Trump administration to claim lower costs as a victory.
Drivers in California once again paid the highest prices in the nation, for a statewide average of $6.38 per gallon, followed by Hawaii ($5.63), Washington ($5.48), Nevada ($5.48), Oregon ($5.04) and Alaska ($5.02). The cheapest price at the pump was found in Indiana ($3.72), Ohio ($3.78) and Georgia ($3.85). Dyed diesel and regular diesel are chemically identical; the only real difference between them is the way they are taxed.
Dyed diesel is exempt from federal excise taxes and restricted to off-road use for construction equipment—including excavators, bulldozers and loaders—and agricultural machinery, among other things. It is also known as red diesel as it is dyed red so that it can be easily identified. Under normal circumstances, if law enforcement finds a driver using dyed diesel on a highway, they may face hefty fines.
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