President Donald Trump on Monday night signed an Executive Order that will allow truck drivers to use red-dyed diesel for highway use through the end of the year in an effort to ease pricing pressure at the fuel pump.
“This targeted action will put money directly in the pocket of American farmers, truckers, and workers, to support their vital service to our Nation,” the order states.
Specifically, the order:
- Directs the Secretary of the Treasury, in consultation with the Secretary of War, to defer payment of the federal excise tax imposed for on-road use of dyed diesel fuel for the remainder of the year without interest or penalties, and to explore pathways to eliminate the obligation to pay the deferred taxes.
- Directs the Secretary of Transportation to coordinate with states, industry leadership and labor organizations on access to dyed diesel.
- Directs the Secretary of Agriculture to ensure farmers’ access to dyed diesel in high-demand areas, and to encourage corresponding action by states.
- Directs the Director of the White House Office of Intergovernmental Affairs to encourage more states to adopt policies that correspond with the Secretary of the Treasury’s actions pursuant to the order.
Within five days of the issuance of the order — so, by the end of this week — the Secretaries of the Treasury and War are to determine whether relief is authorized under U.S. Code governing disaster and other emergency declarations. That determination is directed to include “whether a qualifying event has occurred and which taxpayers have been affected by that event.” If that’s determined to be the case, the Treasury would be required to defer payment of the covered taxes incurred from Oct. 5 through Dec. 31.
Additionally, within five days of the order, the IRS is directed to announce it won’t impose penalties when dyed diesel fuel is sold for use or used on the highway during the covered period.
“The announcement shall also address relief from penalties for failure to make semimonthly deposits of that tax,” the order notes.
The Treasury is also required to issue guidance to identify:
- The specific relief being granted and any conditions on such relief
- The legal basis for relief, covered taxpayers, persons, locations, acts, liabilities, and deadlines
- The beginning and ending dates of each applicable period
- The date by which postponed taxes must be paid
Trump is also requiring the Secretary of the Treasury to explore ways, including legislation, to eliminate the obligation to pay the deferred taxes.
Any relief at the pump is a welcome sight for truck owners, no doubt, but Owner-Operator Independent Drivers Association President and CEO Todd Spencer said Trump’s order “will provide minimal relief” and called instead for “market stability.”
“Truckers are feeling the pain at the pump. Every $1 increase per gallon in fuel costs our members around $400 more per week, and sustained high prices will put many truck drivers out of business,” Spencer said. “Meanwhile, oil executives pad their profits while working families struggle. Consumers also pay the price. Roughly 70% of domestic freight moves exclusively by truck, and the cost of fuel ultimately gets passed on. OOIDA believes allowing the wider use of red-dyed diesel will provide minimal relief. Market stability is essential to bring down costs for the long haul.”
While Trump’s order affects federal taxes for fuel, truck drivers may still be on the hook for state taxes via IFTA in states that do not issue their own dyed diesel declarations. As of Oct. 6, Overdrive has previously reported on three states that have loosened dyed diesel restrictions — Alabama, Nebraska and Texas.
Eight other states have also issued relief, though not all of it applies directly to truck drivers: Arkansas, Indiana, Louisiana, Missouri, North Carolina, North Dakota, Oklahoma and Iowa.
Absent more guidance from the Treasury and states, it’s currently unclear how using red-dyed diesel for on-highway use in states that have not taken action could affect truckers’ ultimate tax bills. Stay tuned for further reporting from Overdrive in the coming days as more information becomes available.
Diesel prices, meanwhile, on slow decline from historic highs
Trump’s order comes as diesel’s national average is declining from its all-time high of $6.53 per gallon set during the week ending Sept. 21. The national average has now fallen two weeks in a row, with the most recent week seeing an 18.3-cent decline after the prior week’s 14.7-cent drop.
The national average for a gallon of on-highway diesel is now $6.20/gallon after the declines, according to the Energy Information Administration.
All regions saw pricing relief during the most recent week, led by a 25.4-cent drop in the Lower Atlantic region.
The cheapest fuel can be found in the Lower Atlantic region at $5.70/gal., followed by the Gulf Coast region at $5.82/gal.
The most expensive diesel is out West in California at a whopping $8.08/gal., followed by the West Coast less California at $6.49/gal.
Prices in other regions, according to EIA:
- New England — $6.48
- Central Atlantic — $6.49
- Midwest — $6.29
- Rocky Mountain — $6.27
