The facts
President Donald Trump signed an executive order late Monday aimed at bringing down near-record diesel prices by waiving restrictions on cheaper red-dyed diesel. Speaking at a campaign event in Nebraska, a state the report notes has been hit hard by the diesel spike, Trump said the order will “allow anyone to purchase tax-free red-dyed diesel for any reason.” He added, “This order will also drive down the costs of all goods, including groceries,” after signing a document which, the report notes, has not been released yet.
Red-dyed diesel is the same as regular diesel. It is just untaxed and dyed red to mark it for off-road use only, such as tractors and industrial equipment. Then the president narrated his own thought process out loud: “For many years, farm vehicles, construction equipment and other off-road vehicles have used what’s known as red-dyed diesel. You know what that is? I don’t know what the hell it is, but whatever it is, it is supposed to be very good,” before adding it is “exactly the same as normal diesel.”
According to a White House fact sheet, the order will temporarily allow off-road dyed diesel for highway use and defer the federal excise tax. It directs the Treasury secretary, in consultation with the secretary of defense, to defer payment for on-road use of dyed diesel for the rest of the year without interest or penalties, and to “explore pathways to eliminate the obligation to pay the deferred taxes.” The order also pushes states to adopt similar policies, promises farmers access in high-demand areas, and says the administration and state governors can “exercise their enforcement discretion” to halt inspections and waive tax liabilities normally tied to on-road use of dyed diesel.
The numbers: diesel went from $3.76 a gallon before the Iran war to a record $6.53 a gallon on September 22, according to AAA, with Monday’s national average at $6.32. Federal tax on on-road diesel is 24.4 cents a gallon; state taxes average 35.5 cents. Between September 23 and October 2, ten states including Texas, Oklahoma and Alabama moved to boost dyed-diesel access for highway vehicles, about a third of diesel sales, per a tally from ClearView Energy Partners. A trucker filling an 18-wheeler with 250 gallons currently pays about $1,575 per fill-up, a cost that could fall by about $150 without the federal and state taxes.
The experts are not impressed. “It’s not really a needle-mover,” said Patrick De Haan, head of petroleum analysis at GasBuddy. He cautioned that making dyed diesel more available is easier said than done given the fluid situation and the state lines truckers cross: “Washington is great at making something sound easy that is not. Just because you’re allowing something to happen, doesn’t mean it will,” He added, “This won’t fix the problem overnight, but it can allow politicians to take a bit of a victory lap.” Trump, meanwhile, declared, “We’re not going to need it long, I hope, we’re not going to need it long because your prices are plummeting and they’re going to really be plummeting,” even as diesel sits up about 77 percent this year, on track for the biggest annual percentage increase since AAA started tracking in 2000.
The underlying problem, per the report, is a global refinery shortage: refineries in the Middle East and Russia damaged by war, China holding back fuel exports to avoid a shortage at home, and U.S. refineries already running as hard as they can. “This does save the consumer money in the short term, but it doesn’t solve the underlying issue,” said Andy Lipow, president of Lipow Oil Associates. Over the weekend, Ukrainian President Volodymyr Zelensky vowed to double down on his country’s attacks on Russian oil refineries. Lipow added, “For Ukraine, this is an existential threat. The only way to bring Moscow to the table is to destroy the Russian refinery system,” and “I expect the drone attacks to continue.”
Our take
There is a special kind of confidence in signing a federal executive order and then, pen still warm, telling the room you have no idea what the thing does. “You know what that is? I don’t know what the hell it is, but whatever it is, it is supposed to be very good,” is not a sentence a president says about his own policy. It is what you say about a restaurant your buddy dragged you to. Trump reviewed his own executive order the way a hungover guy reviews a tattoo he got at 2 a.m.: no clue what it is, pretty sure it’s great.
It gets better. The document he signed “has not been released yet.” Read that again: the president put his name on a piece of paper the public is not allowed to see, then described its contents from vibes. And the tax break is not even a tax break: the order only defers the excise tax while officials “explore pathways to eliminate the obligation to pay the deferred taxes.” which is bureaucrat for you still owe it, they just haven’t decided how to pretend you don’t. GasBuddy’s verdict, “It’s not really a needle-mover,” is the polite version. De Haan’s other line is the real review: “This won’t fix the problem overnight, but it can allow politicians to take a bit of a victory lap.” Translation: the order is a costume. It dresses up like relief and does the square root of fuck-all about the actual problem, which the report names plainly: blown-up refineries, hoarded Chinese fuel, and American plants already running as hard as they can.
Then came the victory speech. “We’re not going to need it long, I hope, we’re not going to need it long because your prices are plummeting and they’re going to really be plummeting,” Trump said, about diesel sitting at $6.32 a gallon, up 77 percent on the year, near an all-time record. That is not a description of prices. That is a weather report from a man standing in a hurricane and insisting it is drizzling.
The funniest line in the whole piece is the most honest thing he has said in years, and it is his own review of his own order: he does not know what the hell it is, but he is sure it is very good. For once, no spin and no superlatives. Just a president, a pen, and total, refreshing, expensive ignorance, at $1,575 a fill-up.
