The expected order would expand the circumstances in which red-dyed diesel, normally restricted to off-road uses like farming and exempt from most federal fuel taxes, can be sold for broader use. A third source said it would likely direct the Transportation Department to work with states on waiving taxes on road diesel, and Treasury to review diesel-related taxes. Highway diesel carries a federal excise tax of 24.4 cents a gallon; dyed diesel is exempt apart from a 0.1-cent charge for the leaking underground storage tank fund.
The move follows Trump’s decision Friday to rule out a diesel export ban after the G7 agreed to release 100 million barrels of crude and diesel reserves over four months. The national average diesel price was $6.32 a gallon last week, down 13 cents on the week but $2.63 higher than a year ago, after hitting an all-time high near $6.50 last month. Several states, including Alabama, Louisiana and Nebraska, have already eased dyed diesel restrictions.
Skeptics note the limits. GasBuddy’s Patrick De Haan said wider dyed-diesel sales do nothing for supply: “It’s simply diesel with red dye added that’s not taxed.” Farmers already burn untaxed dyed diesel; the saving would flow mainly to truckers. The American Fuel and Petrochemical Manufacturers backs considering the waiver, and the White House has said no final decision has been made.