(The Center Square) – The state of Illinois is officially under a disaster declaration over diesel fuel availability and prices, based on how those issues will impact different aspects of the state’s economy – including farming.
The declaration, signed by Gov. J.B. Pritzker, came as President Donald Trump signed a nationwide executive order loosening restrictions on the use of red dyed diesel fuel – which is nearly identical to normal diesel fuel but is intended only for off road vehicles like farm equipment and is exempt from federal fuel taxes.
At a campaign rally in Nebraska, Trump explained the order before signing it.
“Tonight, I’m going to sign a historic executive order to officially waive the off-road requirement and allow anyone to purchase tax-free red dye diesel for any reason,” Trump said.
The order, which is in effect through the end of the year, will allow truck drivers and other diesel users to purchase the dyed fuel tax free – at least at the time of purchase.
Pritzker’s declaration came with a similar measure at the state level, allowing on-road use for farming and farm-related travel, removing penalties in that case.
The governor’s declaration also put much of the blame for higher costs of fuel on Trump and his administration’s engagement in conflict with Iran, blocking off critical oil from passing through the Strait of Hormuz.
The decrease in fuel shipments has hit the supply chain in the U.S., with businesses and even local governments around the country reporting higher costs for goods and transportation services as a result.
During Trump’s speech and signing of his order, he said that it would help to reduce those impacts and lower the price of goods.
“The typical trucker will save over $100 every time they fill up. So it’s more than $100 each time, and farmers will also save millions and millions of dollars. And this order will also drive down the cost of all goods, including grocery prices, very substantially,” Trump said.
Even if farmers in Illinois save on the tax now, there may still be costs associated down the line.
Rodney Knittel, associate director of transportation and infrastructure, said the measure doesn’t guarantee those taxes won’t be seen later.
“Illinois relief applies to dyed diesel sold or used for bulk storage for farming and agriculture purposes. But penalty relief does not mean tax forgiveness. These orders do not eliminate fuel tax liability, so a lower purchase price today may still come with a tax bill later,” Knittle said.
Similarly, Trump’s order doesn’t guarantee that the tax is entirely removed, only that it be “deferred,” though it directs government officials to look for ways to legally forgive the deferred tax money that would later be owed.
Knittel warned Illinois farmers to keep good records for that reason.
“If you choose dyed diesel, keep detailed records of fuel purchases and usage and plan ahead for returning to the highway diesel use after December 31st,” Knittel said.
