Dive Brief:
- President Donald Trump has ordered relief on diesel prices, moving his administration to waive a federal tax that officials say could save over $100 per refill. The tax of 24.4 cents helps cover transportation infrastructure projects.
- The temporary measure will allow tax-free dyed diesel, typically used for off-road agriculture equipment, to apply to highway vehicles such as trucks.
- According to the administration, the order directs the Treasury secretary to defer federal excise tax for on-road use of dyed diesel for the remainder of the year and “to explore pathways to eliminate the obligation to pay the deferred taxes.”
Dive Insight:
Trump’s relief order lands amid record-setting diesel prices that peaked at nearly $6.53 per gallon on average last month before retreating in recent weeks.
The surge in prices comes amid global supply constraints primarily caused by the Iran war. A year ago, prices were $3.71 per gallon, and last month, multiple governors approved dyed diesel tax relief in states including Texas, Missouri and North Carolina.
Despite the move, the expanded highway use of dyed diesel does not address underlying market fundamentals, according to the American Trucking Associations, which has shared concerns over operating costs given extraordinarily high diesel prices.
Trucking groups including the ATA, Truckload Carriers Association and National Tank Truck Carriers previously warned diesel tax relief could affect public infrastructure funding and said tax relief, collected at the wholesale level, can fail to meaningfully benefit the end consumer.
The executive order gives temporary penalty relief and potential tax deferral, not outright tax forgiveness, ATA Chief Advocacy and Public Affairs Officer Henry Hanscom said in a statement to Trucking Dive.
The ATA’s priority is “meaningful, reliable relief that lowers operating costs without creating new compliance burdens or undermining the roads and bridges our industry depends on,” according to Hanscom.
“We look forward to carefully reviewing the IRS’s implementing guidance once it is available to better understand how this relief will work in practice,” Hanscom said.
The Owner-Operator Independent Drivers Association also weighed in on the recent executive order. President and CEO Todd Spencer said in a Tuesday statement to Trucking Dive that the group believes “wider use of red-dyed diesel will provide minimal relief. Market stability is essential to bring down costs for the long haul.”
