Trump's fuel price levers ahead of midterms — SkimNews
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- Trump announced a waiver allowing red dye diesel (normally tax-free off-road fuel) to be used on US highways without federal levies at a campaign stop, though Argus analyst David Ruisard warned the dye is "extremely hard to clean" from tanks, creating tax-evasion risk for truckers when the waiver ends.
- G7 countries agreed to release 100 million barrels of oil and diesel from stockpiles following pressure from Trump, which GasBuddy's Patrick De Haan said "has worked to push prices down to some degree" — though Oxford Economics' Michael Pearce warned it's only a temporary fix since stocks will need refilling.
- Argus estimates the diesel price surge from about $3 to $6 per gallon is 60% connected to the Strait of Hormuz disruption and 40% to the Russia-Ukraine conflict, with crude oil still priced above $100 a barrel even though flow is "nearly back to pre-war levels."
- Trump said he is "thinking about" suspending the federal gasoline tax, but De Haan noted this requires Congressional cooperation and would be "difficult to obtain" before midterms; Indiana's May state gas tax cut already cost the state government $1bn (£760m) in lost revenue.
- Oxford Economics chief US economist Michael Pearce said higher energy prices are responsible for most of this year's inflation uptick, pushing up interest rates and "squeezing household budgets and adding to firms' costs."
- Trump previously backed a ban on US diesel exports, which Pearce said would provide partial relief in the Gulf and Midwest but be of "little benefit" to the Northeast and West Coast while risking refinery production cuts and higher gasoline prices.
- De Haan concluded Trump has "basically pulled all of the small levers that a president can pull," and Ruisard added that even a deal with Iran wouldn't bring immediate relief — damage to Middle East facilities means production would still take four to six months to return to normal.
Why it matters: With polls showing majorities disapproving of Trump's handling of the economy and a 60% Strait-of-Hormuz, 40% Russia-Ukraine split driving diesel from $3 to $6 per gallon, the policy levers Trump has pulled — a G7 release of 100 million barrels, state tax cuts, and a red dye diesel waiver — are temporary patches that economists say cannot substitute for resolving the underlying geopolitical conflicts, leaving affordability a live midterm issue.
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