An executive order lets truckers and farmers run on untaxed red-dyed diesel through year-end. The national average hit a record $6.53 a gallon late last month, and the EIA has raised its diesel forecast for 2026.
Macro · FinancialMarkets.com · October 6, 2026 · Tickers: VLO, MPC, PSX, USO
The oil that is moving out of the Persian Gulf and the fuel that American trucks run on have come apart, and the White House's latest response is aimed at the pump rather than the supply chain.
Under an executive order President Trump signed Monday evening, truckers and farmers may for now fill up with red-dyed diesel for highway driving. That fuel, dyed to mark it for farm and other off-road use, carries no highway fuel tax. Taxes connected to its use are deferred until the end of the year.
The price at the pump
Diesel has been the sore point of the energy shock. Late in September a gallon cost a record $6.53 on average nationwide, and $8.44 in California, which pairs tighter supply with higher state fuel taxes.
Crude is the part of the market that has recovered. Measured by what passes the Strait of Hormuz, crude has nearly regained its prewar volume. Diesel cargoes along the same route are still a small fraction of theirs. Refined fuel, rather than crude, is where the shortage is concentrated.
The forecasts
The Energy Information Administration's monthly outlook, released Tuesday, raised its forecast for the average U.S. retail diesel price in 2026 to $5.19 a gallon from $5.07. It lifted its gasoline forecast to $3.91 from $3.84. Both are full-year averages, so they include months before the spike.
The emergency stock release agreed by Group of Seven governments last week, 100 million barrels in all, includes diesel as well as crude. Heating oil futures, the benchmark for diesel, traded near $4.56 a gallon on Tuesday afternoon, little changed, even as Brent crude swung by more than $3 during the day.
What the order does
The order works on taxes, not barrels. It changes how fuel already in the system is taxed for the users who switch to it, which can lower what they pay at the pump. It does not add refining capacity or bring more diesel through Hormuz.
Competing views
One view is that the measure is fast, targeted relief for the two groups most exposed to diesel costs, truckers and farmers, arriving weeks before the Nov. 3 midterm elections.
Another is that lowering the effective price for some buyers while supply stays constrained could leave overall diesel prices elevated, with the relief showing up for those users rather than in the national average.
Where it shows up
The EIA's weekly retail diesel survey, published each Monday, will show whether the national average starts to fall from its record. The gap between heating oil futures and crude will show whether the G7 barrels are easing the product shortage. A narrowing gap with pump prices still high would point to bottlenecks in distribution; a gap that stays wide would point back to refining and shipping.