K-State Economist Says Dyed Diesel Order Offers Limited Savings for Grain Farmers
MANHATTAN, Kan. — President Donald Trump’s executive order allowing tax-free dyed diesel to be used on roads could provide some relief from high fuel costs, but a Kansas State University agricultural economist says the savings for many grain farmers will likely be modest.
Greg Ibendahl said most diesel used in farm operations is already exempt from the federal fuel tax because it is used off-road. For grain producers, the primary benefit of the temporary change would come when hauling crops on public roads to elevators.
“If you're just strictly a grain producer during this three-month window, it would probably save you about $100,” Ibendahl said. “So certainly not a big thing for farmers. The real benefits from this are going to be truckers.”
Ibendahl said the estimated savings for a typical grain producer are considerably smaller than the broader savings promoted by the White House.
He said the executive order also does not address what he considers the fundamental problem behind elevated diesel prices: tight supplies and limited refining capacity.
“We have a world problem of lack of supply of diesel right now, and that's the reason why prices are so high,” Ibendahl said.
He pointed to long-standing U.S. refining constraints as well as international pressures, including disruptions involving the Strait of Hormuz and the Russia-Ukraine war.
Ibendahl said those supply problems are unlikely to disappear quickly. Under favorable conditions, he estimates it could take about a year for diesel markets to return to price levels seen before this spring.
“If none of those things happen, you know, $6 diesel fuel — that could be the name of the game from here on out,” Ibendahl said.
Higher diesel prices will increase farmers’ expenses during fall harvest and transportation, but Ibendahl said fuel may not be agriculture’s biggest cost concern heading into 2027.
He said rising fertilizer prices could create an even larger financial challenge for producers when spring planting arrives.