By Jarrett Renshaw and Leah Douglas
Oct 23 (Reuters) - With the November midterm elections fast approaching, President Donald Trump is throwing an array of costly and politically fraught solutions at one stubborn problem: the price of diesel.
His administration has offered billions of dollars to farmers, relaxed rules for truckers, eased sanctions on Russian fuel and pressured European allies to release emergency stocks. Yet diesel prices rose again last week, leaving Trump spending political and financial capital without delivering the relief his party wants as voters go to the polls.
Republicans are defending narrow majorities in Congress, and high costs are a major concern for voters. Nearly 80% of Americans blame Trump for higher costs, according to an October Reuters/Ipsos poll.
USdiesel prices rose nearly 10 cents a gallon in the latest week to an average of $6.28, reversing two weeks of declines and remaining near record highs, according to the Energy Information Administration.
The political pressure is particularly acute in traditionally Republican Farm Belt states like Iowa and Kansas, where rising fuel and fertilizer costs, trade disruptions and weak farm economics have fueled discontent among some of Trump's core supporters.
Trump has promoted his diesel measures at campaign rallies across the region. He signed an executive order onstage in Nebraska allowing red-dyed diesel to be used in highway vehicles and announced $8 billion in new farm aid during a rally in Kansas on Monday.
The measures illustrate the trade-offs Trump is accepting in pursuit of near-term relief. The new aid adds fresh strain on federal spending, while the Russian fuel move risks helping Moscow finance its war in Ukraine. Pressure on European allies to release emergency stocks, backed by a threat to restrict US diesel exports, has created diplomatic friction.
“The president tends to discount long-term losses over short-term gain, and I am skeptical if there is any short gain to be had here,” said Chris Borick, a pollster and political scientist at Muhlenberg College in Pennsylvania.
The White House attributed high diesel prices to “pre-existing issues,” including years of refinery closures and damage from Russia's war in Ukraine, while defending Trump's efforts to ease costs.
“The President wants diesel prices to fall, which is why he has taken historic actions to save American farmers, truckers, and workers every hard-earned penny," White House spokeswoman Taylor Rogers said.
SKEPTICISM AND UNANSWERED QUESTIONS
One of Trump's most direct attempts to lower diesel costs has struggled to gain traction.
Trump signed an executive order this month allowing truckers to use red-dyed diesel, typically intended for off-road use such as farm equipment, for highway driving while temporarily avoiding certain federal tax reporting and record-keeping requirements.
But the IRS has not eliminated the federal diesel tax, instead temporarily waiving related reporting requirements and penalties through year-end, leaving uncertainty for truck stops and fuel sellers.
David Fialkov, top lobbyist at NATSO, a trade group representing the largest US truck stop operators, said members appreciate Trump's effort to tackle diesel costs but that the guidance remains "murky" and carries too much risk.
"I really don’t see any of these dyed diesel announcements making a meaningful dent in diesel prices," Fialkov said.
Trump is also turning to federal payments to cushion some of the constituencies feeling the pain.
Government payments to farmers were already expected to top $47 billion this year, buoyed by commodity payments and $12 billion in tariff relief distributed by the US Department of Agriculture earlier this year. The $8 billion farm relief program would push the total to a record $55.4 billion, exceeding the previous high of $45 billion in 2020, when farmers received pandemic assistance.
The payments can help farmers manage higher costs and lost sales but do not directly address the market disruptions driving up fuel and fertilizer prices. They also raise questions about taxpayer spending to compensate producers for damage that farm groups say is linked partly to the administration’s own trade and foreign policies.
“This is the second round of emergency aid this year to address losses that were largely foreseeable,” National Farmers Union President Rob Larew said. “Trade disruptions and rising fuel costs tied to conflict abroad have put family farmers in a difficult position, and one-time payments can't provide the stability they need to plan for the future.”
It is unclear how quickly the latest aid will reach farmers. USDA could not immediately say how the money would be allocated, when payments would reach farmers or whether congressional approval would be required.
FRICTION OVER RUSSIAN FUEL
Some of Trump's efforts to increase diesel supplies carry geopolitical trade-offs.
His decision to ease sanctions on Russian diesel that were designed to restrict Moscow’s energy revenues and limit its ability to finance its war inUkraine has drawn bipartisan criticism -- and raised questions about whether the move will meaningfully lower US fuel prices.
Trump has defended the sanctions relief as necessary to draw Russian President Vladimir Putin into negotiations to end the war in Ukraine and to release American prisoner Stephen Hubbard.
As the administration's intervention efforts have failed to lower fuel costs, Trump has sought to shift blame toward Ukraine and PresidentVolodymyr Zelenskiy rather than the Iran war ahead of the November 3 elections.
Analysts say the Iran conflict has been the much bigger driver of the diesel price spike, disrupting global oil flows and refined-fuel supplies, while Ukrainian attacks on Russian refineries have helped tighten supplies but played a more limited role on the price.
“I sort of see it as a blame-shifting kind of scapegoating operation, more than a genuine attempt to moderate prices in the lead-up to the election,” said EdwardFishman, director of the Maurice R. Greenberg Center at the Council on Foreign Relations.
(Reporting by Jarrett Renshaw and Leah Douglas; Editing by Colleen Jenkins and Deepa Babington)