President Trump signed an executive order on Monday that allows truckers to use a type of diesel fuel that is usually reserved for farmers and construction companies. The move makes “red-dyed diesel” available to truckers, who can avoid paying the federal tax of 24.4 cents per gallon that is applied to the standard version of the fuel.
Under normal conditions, truckers who use the untaxed, red-dyed diesel — which is literally dyed red to make it easy to detect — can be fined $1,000 or more if they get caught. With Trump’s executive order, no fines will be imposed on such use through the end of the year, essentially providing a tax holiday for truckers.
The executive order comes as diesel prices sit near record highs due to shortages stemming from the ongoing war with Iran. Diesel hit a record $6.52 per gallon a few weeks ago, and is currently at $6.30, according to AAA. That’s about $2.60 per gallon higher than a year ago — and a severe problem for those who rely on the fuel for their businesses.
Experts, though, say the tax holiday may not help many drivers. Red-dyed diesel can be hard to find, and national trucking firms may avoid using it so they don’t run afoul of state-level rules. “The largest diesel users are the least likely to use dyed diesel,” Patrick De Haan, head of petroleum analysis at GasBuddy, wrote on social media. “A national carrier crossing five or six states in a day faces enormous risk with a patchwork of rules, legal in one state, and subject to fines in the next.”
The executive order may not help farmers much, either. The fuel they use in their farm equipment is already exempt from federal fuel taxes, and the trucks they use to haul their products on the roads have completed most of their work this year.
At the same time, if lots of truckers start seeking out red-dyed diesel, it could leave farmers worse off. “I think there’s a real chance this could backfire and make the situation worse for farmers,” Michigan State University economist David Ortega told the Associated Press. “Basically anybody that’s running a truck on the highway on regular diesel can now be using this off-highway diesel. Even someone that owns a diesel pickup truck potentially has access to this other type of diesel.”
The fundamental problem, it seems, is that there’s not enough diesel to go around at a price that works for millions of truckers and farmers.