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Truck stops across the country were warned to “proceed with caution” Tuesday by a major industry group after President Donald Trump signed an executive order promoting the use of “red dye” diesel fuel.
Red Dye Diesel is exempt from federal excise taxes because it is used for farm equipment and other off-road use.
The order, signed in front of farmers in Nebraska on Monday night, aims to lower fuel prices by “temporarily” allowing highway use of red-colored diesel fuel, according to a statement from the White House.
US voters are deeply frustrated by high gas prices, and the Trump administration is under intense pressure to lower fuel costs ahead of the November 3 midterm elections.
Monday’s order instructs Treasury Secretary Scott Bessent to “set aside certain diesel fuel tax payment obligations and provide punitive relief to the extent permitted by law.”
It does not waive the federal tax because only Congress can eliminate a tax.
After Trump’s directive, America’s energy marketers warned gas stations to “proceed with caution.”
“Whether relief is available, who it covers, and under what conditions will depend on Treasury regulations and guidance that have yet to be issued,” the group said. “Deferral is not forgiveness.”
In addition, the order does not resolve “EPA or state restrictions” on the dyed variety of diesel fuel, the EMA said.
Other trucking and gas industry groups are sounding a similar note of caution.
“The White House appears to be trying to encourage the supply chain to sell dyed fuel in non-traditional ways,” the Society of Independent Gasoline Marketers of America and the National Association of Truck Stop Owners said in a memo to their members.
“We do not expect the reputable diesel dealers and fuel marketers to do this,” they said. “First, the tax is still owed, so there is limited upside.”
In addition, “the logistical challenges outweigh any visible upside: residual paint remains in tanks and fuel systems.”
For most fuel sellers, “the liability and customer risk outweigh any temporary, uncertain profit.”
The White House did not immediately respond to a request for comment.
A group representing independent long-haul truckers also suggested Trump’s move would provide little benefit to its members.
“Allowing wider use of red-dyed diesel will provide minimal relief. Market stability is essential to lower costs in the long run,” said Todd Spencer, president of the Owner-Operator Independent Drivers Association.
Since the war with Iran began, the price of diesel has risen from $3.76 a gallon to $6.32, an increase of nearly 70%.
The Iran conflict is not the only conflict contributing to the skyrocketing price of diesel.
A recent escalation of the Ukraine-Russia war has included strikes by Ukrainian drones on Russian refineries.
Russia, traditionally one of the world’s major diesel exporters, responded to the attacks by imposing a diesel export ban until at least the end of October.
Trump asked Ukrainian President Volodymyr Zelenskyy to stop strikes on Russian diesel infrastructure.
“Mr. Zelenskyy has to do one thing. He has to stop cutting off diesel fuel in Russia,” Trump told reporters in early September. “There are many other goals. Don’t hit on diesel, because that will hurt the world.”
Oil prices have remained on the rise since the beginning of the year. Brent crude, which was trading above $101 a barrel on Tuesday night, is up more than 66% since the start of the year.
