Trump Plans to Ease Limits on Tax-Exempt Diesel Variety

President Donald Trump is preparing to ease limits restricting the use of a tax-exempt variety of diesel, his latest bid to pare costs for the essential fuel ahead of the November midterm elections.

The Trump administration is expected to unveil the plan targeting so-called red dyed diesel on Monday, according to people familiar with the matter, who asked not to be named before a public announcement.

Full details of the move were not immediately available. The Trump administration plan effectively would allow more widespread use of red or dyed diesel, which is generally available for off-road purposes, such as in farm equipment.

Because red diesel is exempt from the federal excise tax of 24 cents per gallon, any move effectively enabling its use in on-road vehicles without penalties is expected to translate into an effective tax break. While the move wouldn’t directly lower operational costs for harvesters, tractors and other farm equipment that already runs on tax-exempt red diesel, it is seen cutting the expense to run pickup trucks and other on-road vehicles.

The administration’s approach marks yet another effort to slash costs for diesel that have surged amid wars in Russia and the Middle East that pared refining capacity and reduced the shipment of petroleum products globally. In the US, retail prices for diesel averaged $6.32 per gallon on Sunday, according to auto club AAA.

Even though that’s down from an all-time high of $6.53 set last month, farmers, truckers and other users are still paying more than one-and-a-half times what they were on Feb. 28, when the US and Israel launched attacks on Iran and the fuel cost just $3.76 a gallon.

While the planned move is designed to pare costs for some users, it isn’t expected to boost the overall supply of diesel, a chief Trump administration objective. Globally, diesel stocks are exceptionally tight, driving higher prices.

Supplies of red diesel, which is chemically identical to on-road diesel save for the added dye, come from broader US diesel fuel stockpiles. Domestic diesel supplies currently sit at their lowest-ever seasonal levels as demand picks up into the fall.

Because diesel serves as a workhorse fuel — powering farm equipment, propelling shipping and supplying power to rural communities — the higher prices have rippled through the economy, boosting costs for an array of consumer goods.

That’s caused economic hardship and frustration in America’s heartland, where farmers are being hit with high fuel costs during the fall harvest season. Trump is set to visit Grand Island, Nebraska, on Monday, part of a bid to bolster the reelection prospects of Republican Senator Pete Ricketts and help drive GOP supporters, including many farmers and ranchers, to the polls in November.

The planned action comes on top of a Friday agreement by Group of Seven nations and their partners to release as much as 100 million barrels of emergency oil and diesel stocks. The decision followed an intense pressure campaign by the Trump administration aimed at persuading European and other nations to tap emergency diesel stockpiles.

Read More: Trump Says US to Hold Off on Diesel Export Ban After G7 Release

“Diesel prices are coming down, but we have more work to do,” Agriculture Secretary Brooke Rollins said in a social media post on Monday. Trump “is taking action to deliver short-term relief for farmers and ranchers, including prioritizing diesel in the release of 100 million barrels of crude oil. Diesel prices have already dropped about 15 cents per gallon over the last few days.”

Separately, Rollins told Fox Business that Trump would likely make an announcement on relief for farmers later on Monday. Rollins didn’t elaborate but stressed the administration’s focus on lowering diesel costs.

Farm-state lawmakers had been pressuring Trump to ban US diesel exports in a bid to provide at least short-term price relief. But following the G7 decision Friday, Trump said he wouldn’t restrict foreign sales of the fuel.