By Sam Douglass

On Monday, the Trump administration issued an executive order that temporarily lifts federal taxes of $0.244 collected on red dyed diesel, commonly known as “off-road diesel.” The order is in effect for the remainder of the year as the administration seeks to alleviate growing diesel prices for the nation’s agricultural and transportation sectors. However, the order’s effect on Vermont may be smaller than the administration intended.

Since February 2026, fuel prices, including diesel, have soared, leaving Americans to deal with higher costs for fuel and many consumer goods that rely on diesel for transportation. The increase in fuel prices is linked to shipping disruptions in the Strait of Hormuz and retaliatory strikes against oil refineries in response to the United States led armed conflict in the region. The Trump administration is under significant pressure with the November election approaching to alleviate prices for Americans.

At the time the executive order was issued on Monday, diesel prices stood at a national average of $6.32 per gallon compared to $3.67 per gallon one year ago, according to the American Automobile Association. The average diesel price in Vermont on Monday was $6.40 per gallon.

Chemically identical, standard undyed highway diesel is most commonly used by the commercial trucking industry and is taxed to fund highway construction, whereas federally untaxed red dyed diesel is intended for off-road use by construction and farm vehicles. To achieve cost-savings for American truckers, the executive order directs a deferment on the collection of federal taxes for dyed diesel through December 31, however, this may not have a positive impact across the board.

In an interview Tuesday afternoon, Matt Cota, a member of the Vermont Climate Council and lobbyist for the Vermont Fuel Dealers Association, said that despite the stated effect of the executive order, there are still many unanswered questions and he worries that the order may raise diesel prices for current users of the fuel. 

“The order raised more questions than it answers,” said Cota, stating that the state is still waiting on guidance from the federal government regarding the deferment. Cota described two potential scenarios: one where the collection of taxes is pushed back but still ultimately collected, and another where the tax is eliminated altogether, but either scenario warrants further questions. As written in the executive order, Cota said there is a five-day deadline for guidance to be issued to the states following the order.

Additionally, Cota is concerned that the use of dyed diesel by transportation companies and consumers may inflate the already high prices on diesel by creating new demand on the struggling diesel supply. Cota noted that the order doesn’t address low fuel supply as a driver of diesel prices.

“The order certainly generated headlines but I don’t know if it will produce results,” said Cota. 

In addition to helping truckers with fuel costs, the executive order boasts aid to farmers, but that may not be the case in Vermont. In an interview early Tuesday morning, dairy farmer and state representative for Derby, Richard Nelson, said that the executive order didn’t come soon enough to have an impact on Vermont’s dairy industry. According to Nelson, on-road farm vehicles that could benefit from cheaper diesel will soon be traveling far less on Vermont’s roads. 

“The majority of our diesel use is already done for the year. I have about one week left of chopping corn but then that’s about it,” said Nelson.

In terms of logistics, the use of dyed diesel may not be widespread, as some states have bans in place to prevent the use of the dyed fuel on state roads. So, trucks crossing state lines may find themselves in violation of state law by using the cheaper diesel in the state from which they traveled.

According to Reuters, shipping data from September indicated that combined oil exports across the gulf nations have climbed to 81 percent of pre-conflict levels, with exports of crude oil and condensates at 91 percent of pre-conflict levels. The upward momentum was attributed largely by a rebound in oil exports from Saudi Arabia, despite attacks on its pipeline infrastructure last month and a rise in Iranian-backed attacks on commercial shipping throughout the region. At the same time, Iranian oil exports fell to effectively zero amid a U.S. blockade. 

However, despite an increase in oil exports, prices are not expected to reduce at the pumps in many global markets for some time. Attacks on refineries in the Middle East and Ukrainian drone strikes on Russian refineries have created a bottleneck for refining, while demand for certain prized grades of crude oil has raised the price per barrel. In addition, freight costs and insurance continue to drive diesel prices upwards.

“That dynamic is creating a feedback loop. Tight refining capacity boosts diesel prices, which increases demand for diesel-rich crude grades, which in turn supports crude prices,” wrote Ron Bousso, the Energy Columnist for Reuters.