Diesel Relief Drives Record Farm Aid, Russian Fuel Shift

U.S. diesel averaged $6.28 a gallon in the latest week, up nearly 10 cents, ending two weeks of declines as President Donald Trump’s relief measures failed to lower prices before the November 3 midterm elections. The Energy Information Administration reported the increase as Republicans defend narrow congressional majorities and voters focus on costs. Nearly 80% of Americans blamed Trump for higher costs, according to an October Reuters/Ipsos poll.

Farm Belt costs and federal aid

In Iowa and Kansas, traditionally Republican Farm Belt states, fuel and fertilizer costs, trade disruptions and weak farm economics have fueled discontent among some of Trump’s core supporters. Trump promoted relief at campaign rallies in the region. In Nebraska, he signed an executive order allowing red-dyed diesel in highway vehicles. At a Kansas rally on Monday, he announced $8 billion in new farm aid.

The proposed aid would lift federal payments to farmers to a record $55.4 billion. Payments were already expected to top $47 billion this year, including commodity payments and $12 billion in tariff relief that the U.S. Department of Agriculture distributed earlier in the year. The previous high was $45 billion in 2020, when farmers received pandemic assistance.

Payments can help farmers manage higher costs and lost sales, but they don't directly address the market disruptions driving fuel and fertilizer prices. They also raise questions about taxpayer spending to compensate producers for damage that farm groups say is partly linked to the administration’s trade and foreign policies. The USDA couldn't immediately say how it would allocate the latest aid, when farmers would receive payments or whether Congress would need to approve them.

National Farmers Union President Rob Larew called it “the second round of emergency aid this year to address losses that were largely foreseeable.” He said, “Trade disruptions and rising fuel costs tied to conflict abroad have put family farmers in a difficult position, and one-time payments can't provide the stability they need to plan for the future.”

Relief rules and foreign-policy costs

Trump’s executive order lets truckers use red-dyed diesel, normally intended for off-road uses such as farm equipment, on highways, while temporarily avoiding certain federal tax reporting and record-keeping requirements. The Internal Revenue Service hasn't eliminated the federal diesel tax. Instead, it has temporarily waived related reporting requirements and penalties through year-end, leaving truck stops and fuel sellers uncertain about how to comply.

David Fialkov, top lobbyist at NATSO, a trade group representing the largest U.S. truck stop operators, said members appreciate Trump’s effort, but the guidance remains “murky” and carries too much risk. “I really don't see any of these dyed diesel announcements making a meaningful dent in diesel prices,” Fialkov said.

The administration has also eased sanctions on Russian diesel. Those sanctions aimed to restrict Moscow’s energy revenues and its ability to finance its war in Ukraine. Trump has defended the relief as necessary to bring Russian President Vladimir Putin into negotiations to end the war and to release American prisoner Stephen Hubbard. The move has drawn bipartisan criticism and questions about whether it will meaningfully lower U.S. fuel prices.

The measures carry financial and diplomatic costs. Farm aid strains federal spending, while easing sanctions risks helping Moscow finance its war. Trump has pressured European allies to release emergency stocks, backed by a threat to restrict U.S. diesel exports; that pressure has created diplomatic friction. Analysts say the Iran conflict has been the much bigger driver of the diesel price spike, disrupting global oil flows and refined-fuel supplies. Ukrainian attacks on Russian refineries have tightened supplies but played a more limited role in prices.

The White House blamed high diesel prices on “pre-existing issues,” including years of refinery closures and damage from Russia’s war in Ukraine. White House spokeswoman Taylor Rogers said, “The President wants diesel prices to fall, which is why he has taken historic actions to save American farmers, truckers, and workers every hard-earned penny.” Chris Borick, a pollster and political scientist at Muhlenberg College in Pennsylvania, said, “The president tends to discount long-term losses over short-term gain, and I am skeptical if there is any short gain to be had here.”