President Donald Trump has offered farm aid, trucking rule changes and Russian fuel sanctions relief to bring down diesel prices before the November midterms. Prices rose again last week and remain near record highs.
US diesel prices rose nearly 10 cents a gallon in the latest week to an average of $6.28, according to the Energy Information Administration. The increase reversed two weeks of declines and left prices near record highs, even as Trump spends political and financial capital on relief measures.
The pressure is political as well as economic. Nearly 80% of Americans blame Trump for higher costs, according to an October Reuters/Ipsos poll, and Republicans are defending narrow majorities in Congress.
Farm aid and dyed diesel face doubts
Trump announced $8 billion in new farm aid at a rally in Kansas on Monday. That would push government payments to farmers to a record $55.4 billion, above the previous high of $45 billion in 2020. However, USDA official Richard Fordyce told Reuters the aid will arrive after the November 3 election and likely not reach farmers until the end of the year.
Trump also signed an executive order allowing truckers to use red-dyed diesel, normally meant for off-road use, on highways. Yet the IRS has not eliminated the federal diesel tax and has only waived related reporting requirements and penalties through year-end. David Fialkov, a top lobbyist at truck stop trade group NATSO, said the guidance remains murky and carries too much risk.
Russian fuel move draws bipartisan criticism
The administration also eased sanctions on Russian diesel, a step that has drawn bipartisan criticism and raised questions about whether it will lower US fuel prices. Trump has defended it as necessary to draw Russian President Vladimir Putin into negotiations to end the war in Ukraine.
Diesel has also become a catalyst driving up already-elevated US inflation. Government data last week showed its rise was partly behind increases in delivery costs, early-stage food production costs and toy prices.
Analysts say the Iran conflict has been the much bigger driver of the diesel price spike, while Ukrainian attacks on Russian refineries played a more limited role. The White House, in a statement from spokeswoman Taylor Rogers, attributed high prices to pre-existing issues, including years of refinery closures and damage from Russia's war in Ukraine. According to Rogers: "The President wants diesel prices to fall".
Source: Reuters via Investing.com
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