On October 5, 2026, President Donald Trump signed an executive order aimed at easing the burden of high diesel fuel prices by temporarily allowing broader use of tax-exempt red-dyed diesel on public roads. The order defers collection of the federal excise tax on this fuel through the end of the year, a tax typically applied to on-road diesel but exempted for off-road applications such as agriculture and certain construction equipment.
Red-dyed diesel is chemically indistinguishable from regular diesel but is dyed and taxed differently to prevent misuse on highways. The executive order directs Treasury Secretary Scott Bessent, in consultation with Defense Secretary Pete Hegseth, to postpone tax payments and explore ways to cancel them altogether without interest or penalties. The administration also granted federal authorities and state governors discretion to suspend inspections and waive tax liabilities associated with dyed diesel use on public roads.
Trump announced the measure at a rally in Grand Island, Nebraska, claiming it would save truckers approximately $100 per fill-up and provide millions of dollars in relief to farmers. He forecast that the move would help reduce the cost of goods, including groceries, by lowering transportation expenses. At the event, the president acknowledged limited familiarity with the fuel but expressed optimism about its benefits.
The impetus for the order came amid surging pump prices attributed to ongoing geopolitical tensions, particularly the conflict involving Iran and Israel, as well as the war in Ukraine, resulting in constrained refining capacity globally. The White House cited the Russia-Ukraine war and refinery closures in Democratic-led states—allegedly tied to green energy policies—as key factors behind the spike. In contrast, the administration did not specifically link the order to the Iran conflict in its fact sheet. Additionally, Trump highlighted an agreement with European countries to release 100 million barrels of refined diesel and crude oil from strategic reserves over the next four months as part of efforts to stabilize fuel markets.
Despite the administration’s optimism, experts have expressed skepticism about the measure’s overall impact. Patrick De Haan, petroleum analyst at GasBuddy, noted that while suspending taxes on red-dyed diesel might reduce costs for truckers, it would do little for farmers who already have access to this tax-exempt fuel. He emphasized that supply constraints, rather than tax burdens, are the primary driver of elevated diesel prices. Diesel fuel averaged $6.32 per gallon on October 5, following record highs earlier in September. Currently, the federal excise tax on diesel stands at 24.3 cents per gallon, with an average state tax of 35.5 cents per gallon, funds that support highway infrastructure and public transit.
Earlier in September, Trump had expressed support for a temporary ban on U.S. diesel exports to help manage domestic supply but reversed that position in early October, acknowledging that the ban was not seriously considered. Instead, the administration plans to coordinate with European partners to increase diesel availability globally.
The executive order and related actions come amid mounting political pressure on the president as the November 3 midterm elections approach, with high fuel prices negatively affecting public approval ratings. The administration hopes these measures will provide some relief to consumers and key sectors reliant on diesel fuel in the short term.