De Haan: Trump's dyed diesel order offers little pump relief

De Haan's analysis underscores that the executive order has no impact on diesel supply, meaning futures and crack spreads will continue to be influenced by Middle East flows, low inventories and emergency stock releases, not tax policy. In the few states that permit dyed diesel on roads, any shift to that fuel could strain local supplies of off-road diesel during the harvest season, intensifying price pressures regionally. A potentially deferred tax bill might also deter fleets from switching, reducing the expected change in demand. The analysis shifts attention to Congress, where a complete suspension of the federal diesel tax would have a wider but still limited effect on prices.

Trump has framed the diesel tax break in red dye, but GasBuddy's De Haan argues that state laws, a possible deferred tax bill, and empty truck-stop tanks will prevent most drivers from noticing any difference.

De Haan's key points include:

• Trump issued an order that allows red-dyed diesel to be used on public highways free of the federal tax of roughly 24 cents a gallon.
• GasBuddy's Patrick De Haan stated that most diesel users are not expected to see a significant change at the pump.
• Most states still prohibit dyed diesel on roads, and an executive order cannot overturn those state laws.
• The federal tax is reportedly postponed rather than canceled, and many states impose a sales tax on dyed diesel.
• Large fleets will likely avoid switching, the order does not increase fuel supply, and a full tax suspension would require congressional action.

While President Donald Trump's executive order permitting red-dyed diesel on public roads with the federal fuel tax waived may appear to be a big break for motorists, most diesel users are likely to experience little change at the pump, according to GasBuddy's Patrick De Haan.

De Haan, a well-known analyst of US fuel prices, outlined his rationale in a discussion on X, posting under the username @GasBuddyGuy.

The fuel itself is not the problem. Dyed diesel is nearly identical to standard on-road diesel, with the dye simply indicating that the federal tax of roughly 24 cents per gallon has not been paid. Farmers already purchase it tax-free for off-road use, so they see little benefit. De Haan stated that the order is targeted primarily at truck operators, local haulers and owners of diesel pickups.

The main hurdle is state law. An executive order cannot overrule state regulations regarding dyed diesel, and in the majority of states driving on public roads with it is still against the law. De Haan pointed out that Alabama, Louisiana, Nebraska, North Carolina, Oklahoma and Texas have eased their restrictions, but Louisiana's relaxation is limited to agricultural and timber applications.

The fuel might also not be as free of taxes as it seems. Many states impose a sales tax on dyed diesel instead of their fuel tax, and the White House fact sheet reportedly characterizes the federal tax as deferred, not eliminated. If the tax becomes due later, those who made the switch could end up with a bill.

De Haan anticipates that large trucking fleets will remain on the sidelines. Interstate operators would need to deal with a mix of state regulations and tax issues, and most large truck stops do not carry dyed diesel. The executive order does not increase fuel supply, and in certain regions it could reduce availability for farmers during harvest.

His conclusion is that the policy shift is notable on paper but will probably provide restricted and inconsistent relief in reality. A wide suspension of the federal diesel tax would require congressional action, but it would cover every gallon in every state. He recommended that drivers verify their state's regulations before using dyed diesel.