Trump reportedly eyes easing access to tax-exempt diesel
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The price of diesel fuel is displayed at a gas station on Sept. 11 in Miami. Photo: Joe Raedle/Getty Images
President Trump is reportedly poised to suspend restrictions on a type of diesel fuel that is currently exempt from taxes in a move intended to deliver temporary pricing relief.
Why it matters: Diesel prices — which recently hit record highs amid a global shortage — averaged $6.32 per gallon on Monday, according to AAA.
- That's down from the all-time high of $6.53 set on Sept. 22 but up 71% from a year earlier.
Driving the news: The White House is expected to announce as soon as Monday that it will allow more widespread use of red or dyed diesel, which is currently limited largely to off-road use in machinery such as far equipment, according to multiple news reports.
- "Because red diesel is exempt from the federal excise tax of 24 cents per gallon, any move effectively enabling its use in on-road vehicles without penalties is expected to translate into an effective tax break," Bloomberg reports.
- White House reps did not respond to a request for comment.
The big picture: Diesel prices threaten to stoke inflation at a time when consumers are already price-sensitive and businesses are reeling from higher costs due to trade tensions.
- Rajesh Vennam, CFO at Olive Garden owner Darden Restaurants, warned on a Sept. 24 earnings call "we're talking about tens of basis points incremental inflation on commodities" if fuel prices remain elevated.
- Kroger CEO Greg Foran said last month that "I would expect that the pressure is actually going to mount."
- At pork producer Smithfield Foods: "That impact is beginning to flow through in the second half of the year," CFO Mark Hall said last month.
Zoom in: Red diesel is chemically the same fuel as standard diesel but with coloring added to distinguish it from the taxable kind.
- About 10 states — including Alabama, Indiana, Nebraska and Oklahoma — have already "suspended penalties for using red diesel on highways to help farmers manage fuel costs during harvest," according to rural news site RFD.
What they're saying: "Diesel prices are coming down, but we have more work to do," Agriculture Secretary Brooke Rollins said Monday on X.
💠Our thought bubble via Axios Future of Energy co-author Ben Geman: Trump lacks tools to deliver a sharp and sustained cut in diesel and gasoline prices as long as the Iran conflict and attacks on Russian refineries drag on. But he's pulling multiple levers that can bring limited relief, such as Jones Act waivers, pushing Europe to release diesel reserves, and now the new order.
