President Donald Trump's newest fix for soaring fuel prices carries a hidden cost for some of the people applauding it, an economist warned.
Justin Wolfers, an economics professor, took apart the executive order Thursday in an article for his "Platypus Economics" newsletter and on the accompanying episode of his YouTube show of the same name. Trump signed the order Monday night at a campaign rally in Nebraska, opening red-dyed diesel, a fuel normally reserved for farmers, miners and construction crews, to truckers.
Trump didn't appear to have a firm grasp on the fuel before signing.
"Red dye diesel. Do you know what that is? I don't know what the h— it is, but whatever it is, it's supposed to be very good," Trump told the crowd in a clip Wolfers played on the show.
"Well, that might explain some of the policy," Wolfers quipped.
Red diesel is ordinary diesel dyed so inspectors can tell the federal highway tax of 24.4 cents a gallon hasn't been paid. Under the order, truckers can fill up with it from October 5 through December 31 without penalty, which the White House says will save them about $60 a fill-up.
Wolfers pointedly noted the window straddles November, and he argued the White House's math stops after the first chapter. "That is not how economics works," he wrote. "The cheap diesel now available to truckers has to come from somewhere."
That somewhere is the farm fuel depot in the middle of harvest season. Wolfers compared the two fuels to side-by-side swimming pools divided by a wall of tax law, which the order knocks down without adding a drop.
"If there's no new diesel, then every red gallon a trucker takes is one a farmer doesn't get," he wrote, warning that "in some places farmers may simply not be able to get it."
He also flagged what he called his "favorite detail," a section of the order directing the agriculture secretary to make sure farmers can still get red diesel in high-demand areas.
"That's like knocking down the wall between the pools and then appointing a lifeguard to keep the red pool full," he said.
Homeowners who rely on heating oil will pay more too, Wolfers said, while the biggest winners are diesel suppliers already making enormous profits.
"Saying that cutting taxes for truckers addresses cost of living is nonsense," Wolfers wrote. "It's the kind of nonsense one could imagine being bought and paid for by diesel companies."
Despite Trump calling it tax-free diesel at the rally, the order only defers the tax and says the president wants it forgiven, a decision that rests with Congress.
"It's buy now, pay later, for diesel," Wolfers wrote, adding that the president is "kind of, sort of, maybe, pinky-promise saying" he'll work with the next Congress to forgive it.
"America doesn't have a shortage of red dye," he concluded. "We have a shortage of diesel."