While the nation continues to see record-high gas averages, President Donald Trump has announced a new diesel deal with Russia. But will it affect the prices you pay every day?
What Is Trump’s Diesel Deal?
Trump announced a deal with Russian President Vladimir Putin last week that will supposedly put over 300,000 tons of diesel fuel on global and American markets immediately.
The deal is also expected to deliver an additional 500,000 tons in November and 1,000,000 tons afterward, according to a Truth Social post from the president.
The deal coincides with an Oct. 5 emergency tax relief executive order meant to give consumers a diesel tax break from Oct. 5 through the end of the year.
The order allows “dyed diesel” — which is literally dyed red to show tax-exempt status — to be used or sold for use on the highway during that period. Typically, the tax exemption is reserved for off-road vehicles used in farming, construction and similar work. The order allows the tax-free diesel to be used more broadly, with deferred taxation.
Diesel is taxed at 24.3 cents a gallon, plus a 0.1 cent Leaking Underground Storage Tank (LUST) fee, for a total of 24.4 cents in federal diesel taxation.
Will Trump’s Diesel Deal Actually Save Me Money?
The order is intended to temporarily give highway access to tax-free diesel. But is that tax break enough to make a difference to the everyday consumer?
According to posts from petroleum analyst Patrick De Haan, the benefit may not be as simple as a tax exemption. De Haan points out that dyed diesel is usually bought from a supplier or wholesaler for off-road use, rather than from a local station.
“The distribution of dyed diesel is not nearly the same as the distribution of traditional on-road diesel. … there is a smaller distribution system, meaning that selling significantly more may impact negatively the availability,” De Haan wrote.
De Haan also noted that the order relies on states, which have their own diesel taxes, to suspend enforcement of their laws against highway use of dyed diesel.
Which States Will Save From Trump’s Diesel Order?
How much you could save depends on whether your state is dropping its highway dyed-diesel enforcement, its state diesel taxes, or both during the period. A number of states have already imposed dyed-diesel waivers:
- Texas: Suspended state dyed-diesel restrictions and penalties under a disaster proclamation; Sept. 28 to TBD.
- Oklahoma: A 120-day pause in enforcement for farm vehicles; implemented Sept. 28.
- North Dakota: Allows dyed diesel in licensed vehicles for agricultural operations; Sept. 29 to Nov. 30.
- North Carolina: Highway use exemptions for the agricultural season; Sept. 30 to Dec. 31.
- Nebraska: Tax refunds for state agricultural use with an eligible waiver; Sept. 24 to Dec. 23.
- Missouri: Dyed-diesel restrictions lifted for registered highway use for agricultural purposes; Sept. 30 to Oct. 30.
- Louisiana: Dyed-diesel restrictions lifted for certain vehicles with state excise payment; Sept. 23 to Oct. 26.
- Indiana: Dyed-diesel restrictions lifted with certain tax exemptions for farmers and timber harvesters; Sept. 30 to Nov. 4.
- Arkansas: Highway restrictions lifted for farmers and loggers; Sept. 30 to Oct. 30.
- Alabama: Dyed-diesel enforcement paused for 120 days for agricultural and timber relief; implemented Sept. 24.
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