Why Trump just loosened the rules on 'dyed diesel' — normally a farm fuel

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In this aerial view, Dan Duffy uses a tractor to plant soybeans on land he farms with his brother on April 28, 2025 near Dwight, Illinois. Scott Olson/Getty Images North America hide caption

Less than a month before the midterms, the price of fuel is becoming a powerful election issue.

This week, President Trump issued an executive order aimed at lowering costs for frequent diesel users by making a type of fuel called "dyed diesel" more accessible through the end of the year.

Prices for all kinds of oil products have risen this year because fewer ships have been getting through the Strait of Hormuz and transporting crude to refineries worldwide — but the diesel supply chain has been uniquely hit. Ukraine's recent attacks on Russian refineries have taken many of them offline, and Russia has cut back on its diesel exports. China has, too.

It's added up to a limited supply of diesel — a fuel that powers much of the industrial supply chain.

So its price has soared; the U.S. average for a gallon hit a record of $6.52 a few weeks ago. The price has eased a bit since then, but a gallon remains about $2.60 higher than this time last year, according to AAA.

When diesel prices rise, inflation is likely to follow, analysts say. Diesel powers much of the industrial supply chain, from agricultural equipment to trucks transporting goods from warehouses to grocery stores.

The "dyed" part means: red dye. "Red-dyed diesel is diesel with red dye in it. That's it," said Will O'Neill, principal analyst at S&P Global Energy and a follower of all things diesel.

Chemically, this diesel is almost identical to the regular kind you'd find in most gas stations. But it's a different color because it's used, and taxed, differently.

Red-dyed diesel is only meant for off-road vehicles, mainly farm and construction equipment — like a tractor that's used in a field. It's exempt from the federal tax of 24.4 cents a gallon on commercial diesel.