President Trump signed an executive order on Tuesday during a midterm rally in Nebraska, allowing anyone to buy red-dyed diesel for any reason. The move waives the off-road requirement that normally restricts the tax-free fuel to machines that never travel on public roads. The order is temporary, and the White House says it could save drivers hundreds of dollars per fill-up.
Diesel prices remain near record highs, easing slightly from a peak of $6.53 a gallon last month. The administration argues that opening up the cheaper fuel to everyone will ease pressure on trucking, construction and agriculture. Experts are less sure.
What the Order Does
Red-dyed diesel is already exempt from the federal tax of 24.4 cents a gallon on regular diesel used for trucks and other on-road vehicles. The new order removes the restriction that required drivers to prove their vehicle was genuinely off-road before buying it. That means anyone can now purchase the tax-free fuel for any reason, including highway driving.
The White House also deferred the federal excise tax for the remainder of 2026 and directed the Treasury secretary to explore ways to eliminate the requirement to pay the taxes altogether. The administration frames the move as a temporary fix while it works on a permanent solution.
The White House Claims
A White House fact sheet claims drivers could save more than $100 each time they fill up. The source does not explain how the figure was calculated. The administration’s claim rests on the idea that red-dyed diesel costs less than regular diesel because it skips the federal tax.
Who Gets What
Not everyone will benefit the same way. Farmers already get tax-free diesel in most states, and the order extends that privilege to their personal vehicles. But the savings there are minimal, according to Patrick De Haan, a petroleum expert at GasBuddy.
De Haan told CBS News that most farmers have been buying tax-free diesel at scheduled intervals for years, so the new order changes little for them personally. “Most of them have thousands of liters that they’ve been buying at tax-free, at scheduled intervals, I should say, and so it’s not really any huge advantage,” he said.
He added that the savings on a personal vehicle are trivial. “I don’t think that any farmer is going to be jumping for joy at the prospect of saving, you know, 50 or 60 cents a gallon on their personal vehicle,” De Haan said.
Truckers face a different problem. Many states ban using red-dyed diesel on roads and highways, and the White House is working with states to encourage them to waive the ban. De Haan warned that a “convoluted patchwork” of enforcement across states could deter large end users from getting much of the benefit at all.
The result could be that the order makes diesel cheaper for some drivers and more expensive for others, depending on where they live and which states they cross.
The Supply Problem
Tom Kloza, chief energy adviser for Gulf Oil, told CBS News in an email that the U.S. has about 105 million barrels of diesel in inventory. “This move doesn’t increase or decrease that level,” Kloza said.
That is the core of the scepticism. The order does nothing to increase the supply of diesel. It simply allows people to buy a cheaper version of the same fuel. De Haan cautioned that lowering prices without increasing supply could stimulate demand and drive costs back up.
He said, “Whether anyone who makes the switch to dyed diesel suddenly gets a tax bill is the most unanswered question I have.”
The Tax Question
Drivers could potentially owe a tax payment down the road, experts said. The order waives the off-road requirement, but it does not erase the federal tax entirely. The White House has deferred the tax for the remainder of 2026.
De Haan said the outstanding question is whether anyone who makes the switch to dyed diesel suddenly gets a tax bill. “Whether anyone who makes the switch to dyed diesel suddenly gets a tax bill is the most unanswered question I have,” he said.
What States Are Doing
The White House is working with states to encourage them to waive their bans on red-dyed diesel on roads and highways. Some states may comply; others may not. The result could be a situation where drivers in one state can legally use the fuel on the highway, while drivers in the next state cannot.
That is the “convoluted patchwork” De Haan warned about.
The Bottom Line
The administration’s pitch is simple: cheaper fuel means lower costs for everyone who relies on diesel. The sceptics counter that the order ignores the actual problem — a supply shortage — and could create more problems than it solves.
Patrick De Haan summed up the position of the experts who are watching this closely. “Most of them have thousands of liters that they’ve been buying at tax-free, at scheduled intervals, I should say, and so it’s not really any huge advantage,” he said of farmers. And on the broader picture, he said, “Whether anyone who makes the switch to dyed diesel suddenly gets a tax bill is the most unanswered question I have.”
The administration has framed the order as a temporary measure while it works on a permanent solution to the federal excise tax. Whether that effort succeeds remains to be seen.
For now, the order is in effect, and drivers who want to try red-dyed diesel can buy it. Whether they save money depends on where they live, what they drive and whether the White House’s promise of $100 savings per fill-up holds up in practice.
Key Facts Box
- Executive order signed Tuesday during a midterm rally in Nebraska
- Waives off-road requirement on red-dyed diesel
- Federal tax exemption: 24.4 cents a gallon on regular diesel
- Record high: $6.53 a gallon last month
- Pre-war price: $3.76
- U.S. diesel inventory: about 105 million barrels, per Tom Kloza
- White House deferred federal excise tax through remainder of 2026
- Fact sheet claims savings of more than $100 per fill-up
The sceptics have a point. The order changes who can buy the fuel, but it does not change how much of it exists. Until that changes, the price of diesel is likely to stay where it is.
Source material: “Trump temporarily expands use of red-dyed diesel. Will it lower costs?,” CBS News.
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