The Donald Trump administration is increasing access to tax-exempt colored diesel for road vehicles to reduce fuel costs. Trump signed an executive order on Monday, temporarily allowing the use of colored diesel typically used for agricultural operations.
Details of the Executive Order
This order officially waives the requirements related to the use of off-road diesel and allows anyone to purchase tax-exempt colored diesel for any reason. At a campaign rally in Grand Island, Nebraska, Trump referred to this type of fuel, stating: "For years, agricultural vehicles, construction equipment, and other off-road vehicles have used it. I don’t know what it is, but it seems to be very good."
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He added, "This order will also reduce the costs of all goods, including food." Fuel prices in the country have surged, with the average diesel price in the United States reaching $6.32 per gallon on Monday. This figure has increased from $3.76 per gallon at the beginning of the year.
Economic Implications and Support for Farmers
The rise in diesel prices has been exacerbated by attacks on Russian refineries and export restrictions in China. Diesel has increased by 77% this year, marking the largest annual increase since data tracking began in 2000. In response to this price hike, several states in the Midwest and South have sought to increase access to colored diesel for use in road vehicles.
Colored diesel is essentially similar to regular diesel but is exempt from the federal road tax of 24.3 cents per gallon. This measure is particularly significant for farmers, who are under pressure due to rising fuel and fertilizer costs. Economists say that waiving road taxes for colored diesel could lead to substantial savings.
The Trump administration aims to assist farmers and truck drivers with this executive order. For example, filling an 18-wheeler truck with 250 gallons of diesel costs about $1,580, which has increased by $700 compared to the beginning of the year. Waiving federal taxes could save truckers about $60 per fill-up.
This executive order will be valid until the end of the current year. Trump also noted that he hopes prices will decrease rapidly. He said, "I hope this order won’t be necessary because prices are dropping significantly."
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