President Donald Trump is preparing to ease limits restricting the use of a tax-exempt variety of diesel, his latest bid to pare costs for the essential fuel ahead of the November midterm elections.
The Trump administration is expected to unveil the plan targeting so-called dyed red diesel on Monday, according to people familiar with the matter, who asked not to be named before a public announcement.
Full details of the move were not immediately available. The Trump administration plan effectively would allow more widespread use of red or dyed diesel, which is generally available for off-road purposes, such as in farm equipment. Because red diesel is exempt from the federal excise tax of 24 cents per gallon, any move to enable its use more widely — including in on-road vehicles — is expected to translate into a swift reduction in retail prices.
The approach marks yet another effort to slash costs for diesel that have surged amid wars in Russia and the Middle East that pared refining capacity and reduced the shipment of petroleum products globally. In the U.S., retail prices for diesel averaged $6.32 per gallon on Sunday, according to auto club AAA.
While that's down from an all-time high of $6.53 set last month, farmers, truckers and other users are still paying more than one-and-a-half times what they were on Feb. 28, when the U.S. and Israel launched attacks on Iran and the fuel cost just $3.76 a gallon.
Because diesel serves as a workhorse fuel — powering farm equipment, propelling shipping and supplying power to rural communities — the higher prices have rippled through the economy, spurring higher costs for an array of consumer goods.
That's also caused economic hardship and frustration in America's heartland, where farmers are being hit with high fuel costs during the fall harvest season. Trump is set to visit Grand Island, Nebraska, on Monday, part of a bid to bolster the reelection bid of Republican Senator Pete Ricketts and drive Republicans to the polls in November.
The latest move comes on top of a Friday agreement by Group of Seven nations and their partners to release as much as 100 million barrels of emergency oil and diesel stocks. The decision followed an intense pressure campaign by the Trump administration aimed at persuading European and other nations to tap emergency diesel stockpiles.
"Diesel prices are coming down, but we have more work to do," Agriculture Secretary Brooke Rollins said in a
Farm-state lawmakers have been pressuring Trump to ban U.S. diesel exports in a bid to provide at least short-term price relief. But following the G7 decision Friday, Trump said he wouldn't restrict foreign sales of the fuel.
