The U.S. federal government and some U.S. states are taking a range of steps to lower diesel and gasoline prices that have risen in recent months due to supply disruptions stemming from Ukrainian strikes on Russia’s refineries, the conflict in Iran, low global inventories, and a global shortage of refineries as governments closed refineries as part of their commitment to net-zero carbon targets. In the United States, the depleted Strategic Petroleum Reserve is at its lowest level since 1982, and refinery closures resulted in about 400,000 barrels a day less refining capacity than at the beginning of 2025. According to AAA, average U.S. diesel prices hit a record of $6.53 a gallon recently. They are averaging $6.41 per gallon as of September 30. U.S. gasoline prices are averaging $4.43 per gallon on that date.
The Trump administration is looking for ways to bring down diesel prices without disrupting fuel supplies or creating additional costs elsewhere in the economy. It is considering regulatory relief that would allow broader sales of red-dyed diesel, which could let some buyers avoid the federal fuel tax. Red-dyed diesel is generally reserved for off-road uses such as farming and is exempt from most federal fuel taxes associated with roads. Some members of Congress have suggested banning diesel exports, which would not solve the problem and could have the opposite effect. Energy Secretary Chris Wright has asked refineries to take voluntary action to increase the supply of U.S. diesel, which could reduce diesel prices.
Other actions that the administration and Congress could take are: to suspend the federal gas and diesel tax, which will lower the price of gasoline by 18 cents per gallon and diesel by 24 cents per gallon; suspend the renewable fuel standard, which is estimated to lower the price for each fuel by 30 cents per gallon; and permanently repeal the Jones Act, which is estimated to lower the price of each fuel by 2 cents per gallon. Those steps would lower the price of gasoline by a combined 50 cents per gallon, making the average price of a gallon of gasoline less than $4, and lower the price of diesel by a combined 56 cents per gallon, making a gallon of diesel less than $6.
States offer a wide variety of options as each one operates separately, and some states are offering assistance to consumers. One measure U.S. states can take is to suspend their state gasoline and diesel taxes, which some are doing as noted below. California, for example, has the highest gasoline and diesel taxes in the nation at 73.64 cents per gallon and 92.94 cents per gallon, respectively. It also has the highest gasoline and diesel prices in the nation at $6.39 per gallon and $8.39 per gallon, respectively, and yet it has not suspended its state fuel taxes as some other states are doing. Reuters provides the following examples of measures that states are taking to reduce gas and diesel prices:
Alabama: Alabama plans to halt enforcement of restrictions on the use of red-dyed diesel for 120 days.
California: California suspended its seasonal summer-blend gasoline requirement for the remainder of the season and directed state agencies to allow winter-blend gasoline to be manufactured, imported, distributed, and sold in the state.
Georgia: Georgia suspended its gasoline and diesel tax for 30 days and lifted weight restrictions on commercial vehicles to reduce the cost of transporting goods.
Illinois: Illinois paused a 1.3-cent increase in the gasoline tax for six months this summer.
Indiana: Indiana suspended its gasoline sales tax.
Kentucky: In May, by executive order, Kentucky reduced the gasoline tax by 10 cents and froze any increases in gasoline taxes and motor vehicle property tax in 2027.
Louisiana: Louisiana recently indicated it would allow farmers and timber harvesters to use the dyed diesel fuel in highway vehicles.
Massachusetts: Massachusetts proposed legislation to temporarily suspend its 24-cent-per-gallon tax on gasoline and diesel for two months, beginning seven days after passage. Retailers would be required to reflect the temporary suspension in pump prices, and gasoline station owners would be protected from losing money on fuel sold at the reduced price.
Michigan: Michigan temporarily waived an environmental rule, allowing regional gasoline stations to sell cheaper, higher-vapor winter blends and E15 through the summer.
Montana: Montana waived certain hours-of-service rules for intrastate gasoline and diesel haulers.
Nebraska: Nebraska allowed highway-registered vehicles to use untaxed dyed diesel fuel without facing state fines or penalties. Diesel taxes paid while transporting Nebraska’s seasonally produced products and livestock on state roads are eligible for a refund, and weight limits for seasonal crop transport were eased.
Oklahoma: Oklahoma paused enforcement of all taxes, regulations, and fines levied on the use of red-dyed diesel in farm vehicles and highway vehicles for 120 days.
South Dakota: South Dakota permitted farmers and haulers transporting crop, livestock, and other agricultural commodities to do so at up to 10% above standard highway weight limits and temporarily waived the $25 overweight trip permit fee. It also directed the Department of Revenue to monitor fuel supplies and determine whether a tax refund to suppliers is warranted if regular diesel must be used in farm machinery because of potential dyed diesel shortages.
Texas: Texas is expanding the use of dyed diesel on Texas roads, raising the allowable weight for fuel, agricultural, and timber, and suspending the state’s low-emission diesel fuel regulations to reduce emissions of nitrogen oxides from diesel-powered motor vehicles and non-road equipment.
Conclusion
The U.S. federal government and states are considering actions to lower gasoline and diesel prices, which have risen due to Ukrainian attacks on Russian refineries, the conflict in Iran, low global oil stocks, and global refinery shortages. The Trump administration is looking for ways to bring down diesel prices without disrupting fuel supplies or creating additional costs elsewhere in the economy. It is considering broader sales of red-dyed diesel, which could allow some buyers to avoid the federal fuel tax; banning diesel exports, which would not solve the problem and could have the opposite effect; and asking refineries to take voluntary action to increase U.S. diesel supply, which could reduce diesel prices.
Other actions it could take with Congress include suspending the federal tax on gasoline and diesel and the renewable fuel tax, and permanently repealing the Jones Act. These combined actions are estimated to lower gasoline costs by 50 cents a gallon and diesel costs by 56 cents a gallon. States have taken a variety of actions, from suspending state gas and diesel taxes to expanding the use of dyed diesel and loosening environmental restrictions. The goal is to provide relief for consumers while production returns in warring parts of the world and stocks recover.
