New Fuel Cost Proposal: How Much Relief Will It Really Deliver?

Governments in the United States and abroad are pursuing temporary tax waivers, fuel subsidies and regulatory changes as elevated diesel and gasoline prices continue to pressure carriers, farmers, loggers and other fuel-intensive businesses. The measures range from state tax relief in North Carolina to proposed levy reductions in South Africa and continued fuel-duty support in the United Kingdom.

U.S. fuel relief measures expand

North Carolina Gov. Josh Stein signed House Bill 3 during a one-day special session, temporarily suspending the state’s 41-cent-per-gallon tax on gasoline and diesel through Nov. 30. The law also provides relief to farmers and loggers by waiving penalties through the end of the year for the use of red-dyed diesel in highway vehicles.

“I am signing this bill to keep more money in people’s wallets, but this temporary relief is just one step,” Stein said.

Other recent federal actions cited in the fuel-relief discussion include a red-dyed diesel order, a Federal Motor Carrier Safety Administration fuel emergency declaration, an Internal Revenue Service tax waiver and an $8 billion harvest fuel relief program announced by President Donald Trump. The harvest program is intended to offset farmers’ diesel costs through one-time payments.

Several federal orders have been issued, although the full impact of the measures on fuel costs remains unclear. The Renewable Fuel Standard is also drawing attention as a potential source of transportation costs. The Environmental Protection Agency program requires fuel sold in the United States to contain minimum amounts of renewable fuels, including ethanol. Critics of the requirement argue that compliance costs add pressure in a market already affecting household and business budgets.

EPA cites lower regulatory costs

The EPA said its latest action involving oil and natural gas regulations will reduce regulatory costs for consumers and businesses while supporting domestic production. The agency presented the change as part of a broader effort to reduce expenses tied to energy production.

The development comes as fuel and other operating costs remain a concern for trucking companies, even as one industry report described the freight market as entering an upcycle. Higher diesel prices can affect carrier margins, fuel surcharges, shipper costs and the prices ultimately paid for delivered goods.

South Africa considers levy reductions

In South Africa, the Automobile Association has backed calls to phase out the general fuel levy and the Road Accident Fund levy. The organization said removing the charges could significantly reduce motorists’ fuel costs and provide relief to businesses that depend on road transportation.

Higher gasoline and diesel prices increase expenses for deliveries, freight movement and other services, with some of those costs eventually passed on to consumers. Finance Minister Enoch Godongwana said National Treasury’s long-term plan is to remove all fuel levies, a move he said could save motorists R6.5833 per litre of petrol.

Parliamentary stakeholders have also proposed continued government subsidies to keep fuel prices below US$2 per litre. Separate projections cited in the discussion indicated that diesel prices could decline by between R1.60 and R1.70 per litre, while gasoline could fall by no more than 30 cents per litre.

The basic fuel price formula is also under review. National Treasury previously said the review would focus on retailer and wholesaler margins and other smaller levies, rather than immediately changing the basic fuel price formula.

Fuel-duty support continues overseas

In the United Kingdom, the government extended a fuel-duty freeze and canceled a planned increase as part of measures aimed at easing cost-of-living pressures. Chancellor John Healey also cited the effect of conflict in the Middle East on oil prices and pump costs.

The United Kingdom previously introduced a 5-pence-per-litre fuel-duty reduction in 2022 after Russia’s invasion of Ukraine. The temporary cut was estimated to cost the government £2.4 billion.

Japan’s Liberal Democratic Party has proposed a smooth transition away from the country’s fuel-subsidy program. The proposal stated that gasoline prices in Japan are lower than those in Europe and the United States, while calling for continued consideration of consumer and business costs.

Debate has also continued in the United Kingdom over proposals to remove standing charges from gas bills and move certain energy levies into general taxation. Supporters say the changes could help low-income households and prepayment customers, while critics note that fixed network costs would still have to be paid by other customers or through public funding.