By Tom Polansek
CHICAGO, Oct 22 (Reuters) – US President Donald Trump signed an executive order this month to expand access to tax-exempt diesel as soaring prices frustrate voters ahead of midterm elections. But farmers say it is too risky to use the fuel on public roads, while some other drivers do not have access to it.
Trump has sought to lower prices and boost his sagging approval ratings through a series of actions focused on fuel, including an $8 billion financial support program he announced on Monday to offset diesel costs for farmers during the autumn harvest.
His administration also relaxed sanctions on Russian fuel shipments, pushed allies to release emergency oil stocks and temporarily lifted restrictions on foreign-flagged vessels moving between US ports. Still, prices remain elevated because of the US-led war with Iran.
Trump said his executive order would temporarily waive an off-road requirement for red-dyed diesel, which is generally sold for use in farm equipment. Red diesel is essentially the same as regular or clear diesel but exempt from highway fuel taxes. It is dyed red to indicate highway taxes have not been paid.
Farmers said potential savings from using dyed diesel in semi-trucks on highways were too small to justify the risk of red residue staying in fuel tanks after the order expires. States have their own taxes and rules for red diesel use, and can fine drivers thousands of dollars if authorities inspect fuel tanks and find signs red diesel was used improperly on public roads.
The Internal Revenue Service said it would not impose a penalty when dyed diesel is used on highways from October 1 to December 31 but that Trump’s order had no effect on state taxes and penalties.
“In my mind, it’s not anywhere near worth the risk,” said Glenn Brunkow, president of the Kansas Farm Bureau, who raises crops and cattle near Wamego, Kansas. “That residue might be in there for years.”
FINES UP TO $10,000 IN KANSAS
Farmers use the most diesel during the autumn harvest season, burning dyed fuel in tractors, combines and other machinery. Under Trump’s order, they could also use red diesel to haul crops to market in semi-trucks normally fueled by clear diesel, if allowed by states.
Kansas, a major grain producer, prohibits using dyed diesel on public roadways unless it is purchased lawfully outside the state. Violators can be charged with a felony, have their driver’s license suspended, and face penalties of $1,000 to $10,000, according to the Kansas Department of Revenue.
Governor Laura Kelly, a Democrat, said the state could not legally implement Trump’s order as drafted. The Kansas Highway Patrol was concerned it “would result in law enforcement difficulties once red dye diesel returns to its normal usage restrictions,” she said in a statement.
Democrats hope surging farm costs can help revive their support in the Republican heartland in November’s midterm elections.
Trump wants lower fuel prices, White House spokesperson Taylor Rogers said.
“President Trump remains committed to unleashing American energy dominance, cutting costs, and putting more money back in the pockets of hardworking American families,” Rogers said.
For Jay Sorg, a fifth-generation farmer in New Richland, Minnesota, the order could save $1,500 to $2,000, but that is not enough to offset higher costs for fuel and other inputs. Like many farmers, he buys diesel in advance to store in tanks.
“In the grand scheme of our business, it’s kind of inconsequential, especially when we already have fuel bought and in the tank for highway use,” Sorg said. “It’s a move to try to win votes.”
Ryan Wagner, a farmer in Roslyn, South Dakota, worried that increasing usage of tax-exempt red diesel could drain government funds used to maintain roads.
“It’s a very short-sighted plan that could come back and haunt us in the future,” he said.
LIMITED ACCESS
For other motorists, it can be hard to get their hands on red diesel.
Iowa Governor Kim Reynolds, a Republican, issued a proclamation that allows vehicles to use dyed diesel on highways until February, but only if they are hauling specific agricultural products.
In Texas, drivers must register with the state to take advantage of a temporary suspension of restrictions on the use of red diesel on highways.
A Reuters reporter visited four sites around Houston that were listed online as selling red diesel by companies that offer fuel cards to commercial operators. Three of the sites sold only commercial diesel, and red diesel pumps at the fourth site were not working. A notice at the fourth site said red diesel was purely for agricultural use and should not be used on roads.
Vincenzo Lasalosi, a firefighter in Houston, said he considered using red diesel in his Ram 2500 truck due to high diesel prices but did not know where to find it.
“Even if I do find it, it’s probably too far and not worth the drive to fill it up,” he said.
(Reporting by Tom Polansek in Chicago. Additional reporting by Arathy Somasekhar in Houston and Jarrett Renshaw in New York. Editing by Rod Nickel)
Comments