Trump allows broader use of tax-exempt diesel to address rising fuel costs
President Donald Trump signed an executive order allowing wider usage of red-dyed diesel, typically reserved for off-road vehicles like farm equipment and construction machinery. This move aims to alleviate record-high fuel prices that reached over $6 per gallon in September 2026 — a historic spike driven by global supply constraints from the war in Ukraine and limited refining capacity. The order temporarily permits truckers and farmers to use tax-exempt diesel, which is not subject to a 24.4 cent-per-gallon highway fuel tax. The directive also instructs Treasury Secretary to defer collection of federal excise taxes on highway diesel through December 31, 2026, without interest or penalties. The administration emphasized that the decision was made in response to surging transportation costs and increased household expenses due to tight global supply conditions. Americans are currently spending about $700 million more per day on fuel compared to a year ago. The G7 nations agreed earlier this month to release 100 million barrels of diesel and crude reserves, following Trump’s push for restrictions on U.S. exports.
Topics: energy government_policy transportation