Missouri Executive Order Allows Red-Dyed Diesel Use on Highways, Offering Temporary Fuel Tax Relief

JOPLIN, MO. – Missouri farmers could see temporary savings on diesel fuel following an executive order signed by Gov. Mike Kehoe allowing red-dyed diesel to be used in vehicles on state highways.

Executive Order 26-19 is intended to help ease rising fuel costs by temporarily allowing the use of red-dyed diesel, which is normally reserved for off-road equipment and is exempt from certain fuel taxes. The change expands access to the lower-cost fuel beyond agricultural operations, according to Ben Baker, Missouri's State Director for Rural Development.

Baker said the measure is part of broader efforts to provide relief as farmers, truckers and other consumers face higher energy expenses.

What is red-dyed diesel, and how much could drivers save?

Red-dyed diesel, also known as off-road diesel or farm diesel, is standard ultra-low-sulfur diesel fuel with a red dye added to identify it for tax-enforcement purposes.

The fuel is typically used in equipment that does not travel on public roads, including tractors, combines and construction machinery. Because it is intended for off-road use, it is generally exempt from federal and state highway fuel taxes.

Chemically and in performance, red-dyed diesel is identical to regular on-road diesel, Baker explained. The dye serves as a marker to help authorities identify fuel that has been sold without highway taxes.

"The dye is just there purely for tax enforcement and identification," Baker said.

Under normal circumstances, using tax-exempt dyed diesel in vehicles on public highways is generally prohibited and can result in penalties. The temporary federal and state actions create an exception to those restrictions within the scope of the applicable orders.

Baker said the temporary tax relief could offer substantial savings, particularly for people who regularly purchase large quantities of diesel.

He cited a federal diesel excise tax of approximately 24.4 cents per gallon and a Missouri tax of 29.5 cents per gallon. Combined, those taxes amount to nearly 54 cents per gallon.

With the temporary relief, eligible drivers could save more than 50 cents per gallon, depending on the taxes covered by the applicable provisions.

For a large truck that costs as much as $1,000 to refuel, Baker said the savings could exceed $100 per fill-up in some cases. For farmers, ranchers and trucking businesses that refuel frequently, the savings could add up over time.

Baker also estimated that the broader relief effort could potentially generate $640 million in federal and state savings nationwide.

Executive order expands use beyond farm equipment

Although red-dyed diesel has traditionally been associated with farm equipment, Baker said Missouri's executive order expands its use on highways beyond agricultural operations.

"Anybody that has red dye stored, they can use that now for their regular vehicles or any equipment that is used on highways," Baker said.

The change follows federal action intended to provide temporary relief from volatile oil prices. Baker said Missouri is among 11 states that have taken additional action at the state level.

He explained that the federal action addresses the federal fuel tax, while the state's executive order addresses the state portion of the taxes.

Baker supports considering permanent tax relief as costs rise

The temporary measure has also raised questions about whether fuel tax reductions could become a longer-term policy.

Baker was asked whether he would support making the relief permanent or eliminating fuel taxes altogether. He said he would welcome efforts to reduce taxes.

"I would be fine with that," Baker said. "As you know, I'm a fiscal conservative and anything we can do to lower taxes, I'm all about it."

Baker praised Kehoe for taking action and said policymakers should consider additional relief as energy expenses continue to affect households and businesses.

"Obviously it's temporary relief, but anything we can move to permanent relief because of the costs, the added costs and rising costs of energy, I think we should at least consider it," Baker said.

He added that the administration is exploring other ways to address energy prices, including efforts involving international oil supplies.

Baker said fuel is only one of the many expenses agricultural producers must manage. The costs of operating equipment, purchasing supplies and maintaining farm operations can place significant financial pressure on farmers and ranchers.

He encouraged people to understand the temporary policy and determine whether they can take advantage of the savings.

"I think people just need to, you know, kind of understand what it is and how it does help bring some temporary relief," Baker said.

He noted that agricultural producers regularly face high operating costs, making even temporary savings potentially valuable.

"Our farmers and ranchers are always in a pinch," Baker said. "They're always, you know, it's the inputs when it comes to what it takes for them to operate is expensive."

The temporary change provides another option for eligible drivers seeking to manage fuel expenses as energy prices continue to affect transportation, agriculture and other industries.

For Missouri residents who use diesel-powered vehicles, the measure could offer short-term savings. However, drivers should confirm the current requirements and effective dates of the state and federal orders before using red-dyed diesel on public highways.