Trump to issue order expanding access to tax-exempt diesel fuel, sources say

• Diesel prices reached a record $6.50 per gallon last month due to attacks on refineries in Russia and the Middle East linked to conflicts in Iran and Ukraine
• The order may expand access to tax-exempt red dye diesel (used in agriculture and off-road vehicles) and direct the DOT to coordinate state-level tax waivers on road diesel
• G7 countries announced a release of 100 million barrels of diesel last week following pressure from Trump, who had considered banning US exports of the fuel

Summary

President Donald Trump is preparing to issue an executive order to expand access to tax-exempt diesel fuel, potentially as early as Monday, October 5, according to sources familiar with the matter. The move comes as diesel prices surged to a record high of approximately $6.50 per gallon last month, posing a political risk ahead of the November 3 elections.

Key Developments:

The price spike stems from ongoing conflicts in Iran and Ukraine, which have resulted in attacks on refineries in Russia and the Middle East. The anticipated executive order will include multiple measures to increase diesel accessibility, including:

• Expanding availability of red-dye diesel fuel, currently used in agriculture and off-road vehicles
• Directing the U.S. Department of Transportation to coordinate with states on waiving road diesel taxes

Market Context:

Prior to this announcement, G7 countries pledged to release 100 million barrels of diesel following pressure from Trump, who had contemplated banning U.S. diesel exports. However, uncertainty remains regarding how much of this release represents new supply versus compliance with a March global agreement.

Implications:

The order targets relief for the trucking industry, which is critical to goods transportation and supply chains. High diesel costs typically translate to increased consumer prices across multiple sectors. The timing appears politically motivated, with elections approaching and fuel prices representing a key voter concern. The policy could provide short-term price relief but raises questions about tax revenue impacts and long-term supply dynamics in the diesel market.