Trump Prepares Order Expanding Tax-Exempt Diesel as Pump Prices Stay Near Record Highs

Since Russia extended its diesel export ban last week to protect its own fuel supply amid Ukrainian strikes on its refineries, U.S. diesel prices have stayed stubbornly close to record territory, and President Donald Trump is moving to change federal rules rather than restrict exports.

Trump is preparing an executive order, expected as soon as today, that would expand access to tax-exempt "red-dyed diesel," the fuel used in farming, construction and off-road equipment, according to Reuters reporting carried by the Miami Herald. A third source told Reuters the order will likely direct the Department of Transportation to coordinate with states on waiving taxes for on-road diesel too. Bloomberg first reported the plan.

A separate account from Bloomingbit, citing a report from Walter Bloomberg, says the formal announcement could land October 6. Either way, the administration has been working on this for more than a week, according to PIQ Markets. The package includes "non-enforcement" of existing dyed diesel limits and a Treasury Department review of diesel-related taxes.

The numbers behind the push

The average U.S. diesel price sits at $6.32 a gallon, down 13 cents from a week earlier but still $2.63 higher than a year ago, according to Bloomingbit. That's an improvement from the $6.52 a gallon record hit on September 22, per the AAA fuel price index cited by the Epoch Times.

Since the U.S. joined hostilities alongside Israel against Iran at the end of February, Americans have paid more than $51 billion in excess diesel costs, according to Brown University's Iran War Energy Cost Tracker, cited by the Epoch Times. That's the economic backdrop Trump is governing against five weeks before the November 3 elections.

What Trump ruled out, and what he's blaming

Trump had floated a temporary export ban at the United Nations on September 22, telling reporters alongside Ukrainian President Volodymyr Zelenskyy, "I've called for that, too. I've said let's not send out the diesel." Rep. Tim Burchett (R-Tenn.) had already introduced two bills, H.R. 10423 and H.R. 10422, to restrict diesel exports until prices fall below $4.50 a gallon for 30 straight days.

Trump has since dropped the export ban idea entirely, according to PIQ Markets and Bloomingbit, in favor of the tax-exemption approach. Some congressional Republicans had opposed waiving excise taxes on diesel because states rely on that revenue for infrastructure, PIQ Markets reported.

On Monday, Trump tried to redirect blame for the price pain. "What's driving up Gasoline is no longer the Strait of Hormuz, because Record Numbers of Barrels are coming out now on an almost daily basis, but the word, 'Refineries,' where Russia's are being blown up by Ukraine, and where ours are being closed up, in Blue States, like California, by the Dumocrats," he wrote on Truth Social, according to Reuters reporting carried by KFGO.

That claim deserves scrutiny on both halves. Ukraine's strikes on Russian refineries are a documented driver of the global diesel crunch, confirmed by Philip Rossetti of the Lighthouse Energy Institute, who told the Epoch Times that strikes on Russian refineries plus continued disruptions near the Strait of Hormuz are restricting global supply. The claim that California Democrats are shutting down refineries is Trump's own characterization. No source here independently verifies that framing, and it should be read as the president's political argument, not an established fact.

Will it even work?

Not everyone thinks the executive order will matter much. Tom Kloza, chief energy adviser for Gulf Oil, told Bloomberg that easing limits on red-dyed diesel is unlikely to meaningfully lower prices, and that the only thing that will really move the market is an end to the wars in Russia and the Middle East.

That's a fair concern from someone whose job is pricing this market every day. Dyed diesel is a narrow carve-out for off-road and farm use. It doesn't touch the on-road trucking diesel that drives freight costs and, by extension, grocery and goods prices nationwide.

Last week's G7 commitment to release 100 million barrels of diesel, secured after pressure from Trump, is still of uncertain real-world impact. PIQ Markets and the Miami Herald both note it's unclear how much of that release represents genuinely new supply versus countries simply complying with a global agreement struck back in March.

The open question is whether Trump's order, once formally signed, moves diesel prices at all before November 3, or whether Kloza is right that nothing short of ending the Iran and Ukraine wars will bring $6-plus diesel back down to earth.