Diesel Holds Above $6 a Gallon as Trump Pitches $8 Billion in Fuel Aid to Iowa Farmers

Iowa has not had a Democratic governor or senator in more than a decade. With the incumbents retiring, both races are competitive this year, and diesel is a big reason why.

The national average for diesel was $6.29 a gallon on Oct. 14, according to AAA. A year earlier it was $3.65. Regular gasoline sat at $4.33, versus $3.07 a year ago.

Diesel has eased slightly from its record last month but remains above $6. Crude prices are still high.

Harvest costs on the farm

Aaron Lehman, president of the Iowa Farmers Union, says he is spending an extra $1,000 a day to harvest and haul his crop. That is double his 2025 cost. The fertilizer that fed this year's corn now costs 75 percent more than it did a year ago.

"Right after the war, the prices for fertilizer and diesel spiked dramatically, and we have seen that continue all the way through to our inputs for harvest and what -- the fertilizer for next year," Lehman said.

Farmers were already squeezed. Trade fights last year hurt crop exports, and a September with some of the heaviest rains the state has ever recorded delayed the harvest.

Where the price spike comes from

The U.S. and Israel attacked Iran in late February. Tehran responded by blocking the Strait of Hormuz, a key route for oil and gas shipments.

Since then, gasoline is up more than 45 percent and diesel is up 67.7 percent, according to AFP's tally of AAA data. Gasoline accounted for more than half of September's monthly jump in consumer prices.

The Labor Department reported Wednesday that the consumer price index rose 3.7 percent year over year in September. Analysts had forecast 3.6 percent, and August was 3.4. Core inflation, which strips out food and energy, was 2.6 percent.

The White House points to other causes as well. It blames refinery closures and the Russia-Ukraine conflict for high diesel prices.

What Trump is offering

Trump spent Thursday, Oct. 22, in Sioux City, in a congressional district he carried by more than 30 points in 2024. He won Iowa statewide by about 13.

He touted a harvest fuel relief program, announced earlier this week, that would provide $8 billion to offset diesel costs. He also said the administration will use the Defense Production Act to release $150 million to expand U.S. refining capacity.

He pointed to a waiver letting drivers buy untaxed red-dyed diesel, normally restricted to off-road use. "Allowing farmers, truckers and anyone else to fill up diesel totally tax-free," he said.

There is a gap between the pitch and the fine print. The IRS has not waived the federal diesel tax entirely, and industry representatives say that has left fuel providers confused and doubtful the change will lower prices much.

The $8 billion also adds to an already large tab. Federal payments to farmers were forecast to exceed $47 billion this year, including nearly $12 billion in tariff relief. The new money would push the total past $55 billion, above the 2020 record. That is taxpayer money funding a price problem the aid does not fix.

The administration has also eased sanctions on Russian diesel, which drew bipartisan criticism. Trump has said the relief is needed for talks to end the Ukraine war and to win the release of an American prisoner.

The politics

Trump defended his Iran strategy in Sioux City. "If they had a nuclear weapon, you wouldn't be very comfortable," he said. He also promised relief once the fighting ends: "When the war in Iran ends, oil is going to be even less."

Voters are not giving him much credit. CBS News reports that polls show most voters blame the Iran war for surging energy prices and are unhappy with the administration's handling of it. A Reuters/Ipsos poll found almost 80 percent of Americans blame Trump for the rising costs.

In the Senate race, Republican Rep. Ashley Hinson and Democrat Josh Turek opened their debate on diesel. Hinson said she has proposed a multipoint energy plan with diesel prices at the top. "It is about their bottom line and doing whatever we can to reduce energy costs, input costs across the board," she said.

Turek, talking about farmers at harvest, tied the "all-time high of diesel" to the war in Iran.

Republicans on the ground say the mood is not what the polls suggest. Greg Guy, a Republican running for Scott County treasurer, told Fox News Digital that Iowans are "concerned" about gas prices but understand the surge is likely temporary once the war winds down. He said he sees little enthusiasm among Democratic canvassers. Scott County went for Trump 51 to 47 percent in 2024.

Pollster Robert Cahaly of the Trafalgar Group sees it differently. He calls fuel costs "the only real factor that's having an impact" and says Iowa is among several close GOP-held Senate seats. A KFF/AP survey of more than 2,000 rural voters found 67 percent were very or somewhat concerned about paying for gasoline and transportation. That was higher than the share worried about health care, food, rent or utilities.

What comes next

The Federal Reserve meets Oct. 27-28. After the hot inflation report, traders put the odds of another 25-basis-point rate hike at 51.5 percent, according to CME Group's FedWatch tool, up from about 22 percent a day earlier. The 10-year Treasury yield rose to 5.3 percent.

Iowans vote on Nov. 3. Whether $8 billion in relief reaches farm fields before then is a question the administration has not answered.