US President Donald Trump on October 5 signed an order concerning the use on roads of red diesel fuel, which is usually intended for agricultural machinery and other off-road equipment. As Channel NewsAsia reports, the document provides for deferring until the end of the year the payment of tax for using such fuel on roads, without interest and penalties.
Red diesel is effectively the same fuel as regular diesel, but it is exempt from road fuel taxes because it is intended for off-road use. During a rally in Nebraska, Trump said the order eliminates the requirement that this fuel be used off-road and will allow it to be purchased tax-free.
However, a White House fact sheet released together with the order describes a narrower mechanism. Treasury Secretary Scott Bessent, after consulting with Defense Secretary Pete Hegseth, was tasked with deferring until the end of the year the payment of tax on dyed diesel used on roads, as well as finding ways to completely eliminate these obligations.
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The White House said that federal authorities and state governors may, at their own discretion, suspend inspections and exempt drivers from tax obligations. The White House linked the rise in diesel prices to Russia's war against Ukraine and a shortage of refining capacity globally, and also accused states controlled by Democrats of closing oil refineries due to green energy policies.
According to the outlet, diesel fuel prices in the United States have exceeded $6 per gallon in recent weeks. Additional pressure on the global market, it said, was created by export restrictions imposed by the Russian Federation — the aggressor state — after Ukrainian attacks on its fuel facilities. Trump also spoke favorably of an agreement with Europe to release 100 million barrels of diesel fuel from strategic reserves over the next four months.
