Letting more drivers buy red diesel could raise pressure on farmers

For farmers in Marana and across the Tucson region, a temporary federal fuel policy could add another complication to an already difficult growing season. President Trump has ordered a change allowing any driver to use red diesel on the road through the end of the year. The fuel is normally reserved for off road equipment, including farm machinery, and is sold without the federal tax that is charged on standard diesel. A Marana farmer says opening that fuel supply to more users could increase competition for the limited amount farmers rely on to grow and harvest crops.

Arnold Burruel operates two large farms and says diesel costs were already a major part of his budget before fuel prices climbed. His farms harvest during the hottest part of the season every 21 to 24 days, creating a recurring need for fuel to power equipment and complete the harvest. Burruel said his historical harvest budget was about $850 per acre, but he now expects that figure to reach at least $1,200. For farms operating across large areas, even a relatively small change in the price or availability of diesel can affect the cost of producing food.

The fuel at issue is commonly called red diesel because it is dyed to distinguish it from the diesel sold for vehicles traveling on public roads. Regular diesel includes a federal tax of 24.4 cents per gallon. That money is used to help pay for roads. Farm equipment is exempt from the tax when it remains off the road, allowing farmers to use tax free dyed diesel for their machinery. The dye also gives trucking regulators a way to identify drivers who use the fuel improperly.

Before the temporary order, drivers caught using tax exempt red diesel on public roads could face fines beginning at $1,000, with penalties increasing from there. The new policy changes that arrangement for the remainder of the year. Drivers may use red diesel on the road, while the federal tax is deferred rather than eliminated. That means people who take advantage of the policy could eventually be required to pay the tax later, adding uncertainty for truckers and other drivers considering whether the fuel will actually reduce their costs.

Burruel’s concern is not only the price displayed at a pump. He fears farmers will have to compete with a much larger group of buyers for a fuel supply that has traditionally been tied to off road users. If truckers and other drivers begin purchasing red diesel, demand could rise and prevent prices from falling as much as expected. Burruel said fuel prices might come down, but he worries they will not decline at the rate farmers anticipate, or could settle at a higher level because of the added demand.

The policy may not provide much practical relief to trucking companies, according to trucking organizations. Red diesel is generally not available at the locations where truckers normally refuel. Those groups are also concerned about the possibility of a tax bill later because the federal charge is being postponed, not permanently removed. For truckers, the policy could therefore offer limited savings while creating questions about where the fuel can be found and how the deferred tax will be handled.

Trucking organizations say a broader solution would be to increase diesel supplies for everyone rather than expand access to a fuel source that farmers already depend on. That approach reflects the competing pressures created by the order. The measure is intended to reduce fuel costs, but increasing the number of potential buyers could make it harder for farms to secure the fuel they need. In the Tucson area, where agricultural operations in Marana are part of the local economy and food system, the outcome could affect farmers even if most residents never purchase red diesel themselves.

Burruel said fuel is only one part of the financial squeeze facing farms. Low crop prices, high electricity costs and reductions in water supplies are also making it harder to remain in business. He said more farmers may leave agriculture as those pressures build. His warning is that the consequences could extend beyond individual farms, forcing Americans to become more dependent on food produced in other countries that can grow it at lower cost.

The temporary rule comes as farmers are already trying to manage rising expenses against income that does not necessarily increase with them. Burruel’s harvesting schedule means his operations repeatedly absorb fuel costs throughout the hottest months, rather than facing a single annual expense. If access to red diesel changes demand or availability, the effect could appear in each harvest cycle. The order remains in place through the end of the year, and its practical impact will depend on whether more drivers use the fuel, whether supplies increase and whether prices fall enough to offset the added competition farmers fear.