Trump’s red-dyed diesel order sounds like a tax cut. Economists say it’s a 24-cent IOU that could raise prices for farmers
The executive order only defers a 24.4-cent federal tax on $6.20-a-gallon diesel, and it adds no new supply.
Red-dyed diesel, a fuel exclusively used for non-road vehicles like tractors and combines, has gained attention due to a recent executive order from President Donald Trump. This order permits the use of red-dyed diesel on public roads and defers the federal excise tax on it until the end of the year. However, economists argue that this policy change is not as beneficial as it initially appears.
The tax deferment amounts to a 24-cent per gallon IOU, which could potentially raise prices for farmers and other off-road users. While the tax represents a minor portion of the current diesel price, it could significantly impact those industries that rely on red-dyed diesel for their operations, potentially driving up costs. The impact of this policy change on overall diesel prices is limited, as it does not alter the supply or demand dynamics of the market.
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