Because of high diesel prices, Gov. Kevin Stitt asked to temporarily halt taxes, restrictions and fines on red-dyed diesel.
Economists say the move could offer relief to producers facing high input costs and tight margins.
The U.S. war in Iran has rattled fuel supplies, leading to higher diesel prices for people who rely on it. Noting the challenges producers face amid fall harvest, Stitt directed his request to the Oklahoma Tax Commission, the Oklahoma Corporation Commission and the Oklahoma Department of Public Safety.
"As their costs increase, so do our prices at the grocery store," Stitt said in a press release. "The state should ease burdens where it can in order to provide relief for the industry, and for Americans trying to feed their families."
About $0.20 per gallon
In his letter, Stitt requested the Oklahoma Tax Commission seek penalty relief from the Internal Revenue Service.
Emily Haxton, a commission spokesperson, said the agency has asked the IRS for relief for farmers using dyed diesel in vehicles on Oklahoma highways. But commission leaders do not know when the IRS will respond.
"The scope of the relief, including who would qualify and how it would ultimately be implemented, will depend on the IRS's response to the state's request," Haxton said.
If approved, the waiver would apply to state diesel taxes. In Oklahoma, taxes and fees on diesel are about $0.20 per gallon, according to the U.S. Energy Information Administration.
The IRS has previously applied relief to address supply disruptions while keeping the federal tax in place, said Jayash Paudel, a University of Oklahoma economics professor.
"So if the IRS follows that precedent, the realistic saving that we were thinking about is mostly $0.20 worth of state tax, not the $0.44 counting both federal and the state tax," Paudel said.
Diesel is a lot more expensive than even a year ago. The fuel's cost climbed to $6.02 in late September, a new Oklahoma high.
As of Wednesday the fuel's average cost is about $5.79 in Oklahoma, about $2.60 higher than the average a year ago, according to AAA.
"When you think about those two scenarios, state tax only versus state and federal waived, the relief we're talking about is real but really small," Paudel said. "So it roughly offsets, I want to say a dime or two if you're thinking about a $2.60 increase, if you will."
This savings applies to certain equipment.
What is red-dyed diesel and who uses it?
Red-dyed diesel is the same as regular diesel but with added color.
Dyed diesel is for off-road equipment use such as farm machinery and is exempt from motor fuel taxes.
But if a producer has a semi-truck to haul cattle or grain and it needs to go on the highway, Todd Hubbs, grain marketing specialist at the Oklahoma State University Extension, said the farmer is supposed to use clear diesel. The producer could be fined if red-dyed diesel is used in that instance.
"It allows them to go out on the road for 120 days without getting fined," Hubbs said. "So, you know, there's less paperwork for them, less risk for violations."
He said it might also be more convenient for producers. Instead of having different fuel tanks, they can just use one.
"It's a cost savings," Hubbs said. "You know, $0.20 is not nothing per gallon when you're planting crops and hauling crops and livestock."
As fuel costs remain high, Hubbs said producers are seeing elevated fertilizer costs. Oklahoma farmers also are working toward harvesting certain crops like soybeans and cotton.
For consumers at the store, Paudel doesn't expect it to change food prices.
"I would argue that these effects will be negligible. Fuel is a really small share of retail food dollar and the farm truck slice is an even smaller portion, right?" Paudel said. "So I don't think consumers are going to expect a really big amount of relief as far as grocery prices goes."
What are the other state departments doing?
As for the Oklahoma Corporation Commission, spokesperson Jack Money said the governor's request will not impact current operations. The Oklahoma Department of Public Safety has not yet replied to KOSU's interview request.
The federal tax on diesel is about $0.24, according to the U.S. Energy Information Administration. After many states including Oklahoma implemented measures regarding dyed diesel, President Donald Trump signed an executive order to defer diesel fuel tax payments obligations and give penalty relief.
"While my Administration has already undertaken historic efforts to ensure fuel affordability for our citizens, it is clear that further temporary relief is necessary," according to the executive order.
This report was produced by the Oklahoma Public Media Exchange, a collaboration of public media organizations. Help support collaborative journalism by donating at the link at the top of this webpage.
