Trump signs executive order expanding access to tax-exempt diesel

President Donald Trump signed an executive order on October 5, 2026, temporarily permitting highway vehicles to use cheaper, tax-exempt red-dyed diesel normally restricted to agricultural and construction equipment. The measure defers the 24.4-cent-per-gallon federal tax through the end of 2026 to combat near-record diesel prices, which reached $6.53 per gallon following geopolitical disruptions in Iran and Ukraine. Signed at a Nebraska campaign rally, the order aims to shore up support for Republican Senator Pete Ricketts in a tight reelection race, though energy analysts dismiss the policy as a cosmetic gesture that fails to resolve global refining shortages.

Directives of the executive order

• ▪Trump's October 5, 2026 executive order directs the Transportation Department to coordinate with states and industry leaders, and tasks the Agriculture Department with ensuring farmers have diesel supplies
• ▪President Donald Trump's October 5, 2026, executive order allows off-road red-dyed diesel in highway vehicles, deferring the federal 24.4-cent-per-gallon diesel tax through 2026, and directing the Treasury secretary to explore permanently eliminating deferred liabilities

Political context of the Nebraska announcement

• ▪President Donald Trump announced an executive order expanding access to tax-exempt diesel on October 5, 2026, during a campaign rally in Grand Island, Nebraska, in support of Republican Senator Pete Ricketts
• ▪Republican Senator Pete Ricketts of Nebraska is facing an unexpectedly competitive reelection challenge from independent candidate Dan Osborn ahead of the 2026 midterm elections

Surging domestic diesel prices

• ▪National average diesel prices in the United States reached a record high of $6.53 per gallon on September 22, 2026, before settling at $6.32 per gallon on October 5, 2026
• ▪U.S. diesel prices have risen by more than 70% since war in Iran began on February 28, 2026, outstripping price increases for Brent crude oil and unleaded gasoline

State actions on dyed diesel

• ▪The ten states that permitted dyed diesel use in highway vehicles between September 23 and October 2 represent approximately one-third of all U.S. diesel sales
• ▪Between September 23, 2026, and October 2, 2026, ten U.S. states, including Texas, Oklahoma, and Alabama, took independent measures to permit dyed diesel use in highway vehicles

Debatable claims

• ▪States are justified in independently permitting dyed diesel use in highway vehicles
• ▪Trump's diesel executive order is a political stunt to boost Republican candidates
• ▪Trump's red-dyed diesel order is an ineffective response to high fuel prices
• ▪The federal government should permanently eliminate highway taxes on red-dyed diesel