The Trump administration is preparing a plan to broaden the permitted use of red-dyed diesel, which is generally exempt from some fuel taxes when used by farm equipment and other off-road machinery, Bloomberg reports.
President Donald Trump’s administration is preparing to broaden the permitted use of dyed diesel, which is generally used by farm equipment and other machinery off public roads. Bloomberg, citing people familiar with the plan, reported that it could allow wider use, potentially including some vehicles on public roads. The full details have not been announced.
Red diesel is exempt from most federal fuel taxes for certain off-road uses. The Internal Revenue Service says using it for taxable purposes can trigger penalties. Federal taxes on highway diesel total about 24 cents per gallon, including a 24.3-cent excise tax and a 0.1-cent fee.
The proposal is being considered before November’s midterm elections and during the fall harvest, when farmers need fuel for tractors, combines and crop transport. The American Farm Bureau Federation urged Trump in an October 1 letter to temporarily suspend the federal tax on diesel used for agricultural transport and to ease federal penalties for emergency road use of dyed diesel. Farmers cannot postpone harvest or stop using diesel when prices rise, it said.
Bloomberg reported that diesel prices remained about 68% above the $3.76-per-gallon level recorded on February 28, when the U.S.-Israeli war with Iran began. Higher fuel costs affect farm machinery, freight and electricity generation in rural communities. Trump was scheduled to visit Grand Island, Nebraska, to campaign for Republican Senator Pete Ricketts and rally voters.
Bloomberg said diesel prices remained about 68% above the $3.76-per-gallon level recorded on February 28, when the U.S.-Israeli war with Iran began. Higher costs have affected farm machinery, freight and electricity generation in rural communities. The proposal is being considered during the fall harvest and ahead of November’s congressional elections. Trump was scheduled to visit Grand Island, Nebraska, to support Republican Senator Pete Ricketts’ reelection campaign and rally voters.
Supply disruptions are tied to conflicts in the Middle East and Ukraine, restrictions on traffic through the Strait of Hormuz and damage to Russian refining capacity. The International Energy Agency said net Gulf exports of diesel and gasoline were about 390,000 barrels per day in August, slightly more than a quarter of their prewar level. Combined Gulf and Russian net exports of diesel and gasoil were about 1.6 million barrels per day below February levels. Before the disruptions, the two sources accounted for about 45% of seaborne trade in those products. Refineries elsewhere increased processing close to capacity, while observed global oil stocks fell by 507 million barrels from February to August.
Against that backdrop, G7 members agreed to release 100 million barrels of oil and fuel products from emergency reserves through the IEA over four months, with a substantial amount of diesel in the first 20 days. They also agreed to coordinate refinery maintenance and raise processing temporarily where possible. The G7 statement rules out restrictions on energy exports within the group. Bloomberg reported that the deal followed U.S. pressure on European countries over reserves. Some U.S. lawmakers urged a fuel-export ban to lower domestic prices, but Trump said after the agreement that he would not restrict sales abroad.
Agriculture Secretary Brooke Rollins said diesel prices had fallen by about 15 cents per gallon in recent days and that the administration was preparing urgent relief for farmers and ranchers. She added that diesel would be prioritized in the reserve release.
G7 members also agreed to coordinate refinery maintenance, temporarily raise output where possible and avoid restricting energy exports within the group. Agriculture Secretary Brooke Rollins said diesel prices had fallen about 15 cents per gallon in recent days and that the administration was working on urgent relief for farmers and ranchers.