New Fuel Cost Proposal: Will It Really Help Truckers?

Governments in the United States and abroad are pursuing a range of fuel-tax waivers, subsidies and regulatory changes as elevated gasoline and diesel costs continue to pressure carriers, businesses and consumers.

U.S. states and agencies pursue temporary relief

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

Red-dyed diesel is generally intended for off-road use and is not subject to the same fuel-tax requirements as highway diesel. The temporary waiver is intended to reduce operating costs for qualifying agricultural and logging operations.

Several other federal and state actions have also been reported, including a Federal Motor Carrier Safety Administration fuel emergency declaration, an Internal Revenue Service fuel-tax waiver and a harvest-related fuel relief program. Details and eligibility requirements vary by program.

The U.S. Environmental Protection Agency also announced a regulatory change involving oil and natural gas operations. The agency said the action would reduce compliance costs for consumers and businesses while supporting domestic production.

Fuel taxes remain a major cost issue

Another area of focus is the Renewable Fuel Standard, a federal program administered by the EPA that requires transportation fuel sold in the United States to contain specified amounts of renewable fuel. Critics of the program say compliance costs can add pressure to fuel markets, while supporters point to its role in expanding renewable-fuel use.

California is also facing concerns about the long-term effect of fuel-tax changes on transportation funding. The Legislative Analyst’s Office projects that revenue could decline by as much as $4 billion annually by 2035. The Mineta Transportation Institute has estimated potential losses ranging from $4.8 billion to $12.1 billion by 2040.

Those projections highlight the challenge facing governments that reduce fuel taxes: Lower pump prices can provide immediate relief, but fuel-tax revenue often supports roads, bridges and other transportation infrastructure.

International governments consider tax cuts and subsidies

In the United Kingdom, the government has extended a freeze on fuel duty and scrapped a planned increase intended to take effect after an existing 5-pence-per-litre reduction expired. Officials said the measures were designed to help households and businesses manage higher living costs and energy prices.

British businesses and charities, particularly in southern England, have called for additional assistance after diesel prices reached record levels and gasoline prices also increased. The government is separately reviewing energy levies, including charges affecting domestic gas and electricity customers.

In South Africa, the Automobile Association has supported calls to phase out the general fuel levy and the Road Accident Fund levy. Supporters argue that removing the charges would significantly reduce fuel costs, while government officials have reviewed whether fuel levies can be reduced or eliminated.

South African fuel-price estimates cited in the proposals indicate that diesel could fall by approximately 1.60 to 1.70 rand per litre, while gasoline could decline by as much as 30 cents per litre. In Japan, lawmakers have proposed a gradual transition away from the government’s fuel-subsidy program.

Industry impact remains mixed

Fuel relief measures could provide short-term savings for trucking companies, farmers, logging operations and other high-mileage businesses. However, the impact will depend on the duration of each program, eligibility rules and whether savings are offset by other taxes, regulatory costs or changes in fuel prices.

At the same time, some market analysts have described the freight market as entering an upcycle. Elevated fuel and operating expenses remain a concern, however, particularly for smaller carriers and businesses operating on thin margins.