President Donald Trump’s executive order allowing broader use of tax-free, red-dyed diesel fuel has raised doubts among trucking companies and industry analysts about whether the measure will meaningfully reduce transportation costs, Louisiana Illuminator reports.
The order, signed last week in response to record diesel prices, directs the Treasury Department to defer certain tax obligations through the end of the year but does not explicitly eliminate the federal diesel tax of 24.4 cents per gallon. Trucking associations are advising members to avoid using the fuel until federal guidance clarifies eligibility, reporting requirements and potential tax liabilities.
The average U.S. highway diesel price reached $6.20 per gallon heading into the weekend, nearly $2.50 higher than a year earlier, while Louisiana’s average was $5.81.
Although red-dyed diesel is chemically identical to conventional diesel, it is generally sold through a smaller distribution network serving farmers and off-road equipment operators. Analysts warn that increased demand could strain availability, while trucking companies face potential fines for improper use.
In Louisiana, violations carry penalties of $10 per gallon based on a vehicle’s tank capacity. St. Helena Parish hauling company Razorback Rentals owner Karl Means says he will avoid the fuel because removing it from his trucks later could be costly.
Higher fuel expenses are also squeezing his profits. Fuel surcharges that once covered about 90% of his costs now cover only 75%, forcing him to absorb the difference and limiting employee bonuses and other benefits.
Separately, Trump announced a deal with Russian President Vladimir Putin for Russia to supply more than 4 million tons of diesel to global markets, potentially including the U.S. The arrangement could ease supply pressures, but Russia’s ability to deliver the promised volume remains uncertain as Ukrainian attacks target its refineries.
