By Daniela Julio-Cano, FOX23 News
TULSA, Okla. — As Oklahoma farmers continue harvesting crops and managing rising operating costs, a temporary change involving dyed diesel could offer some relief. But farmers say the impact will depend on how the policy works in practice and whether it meaningfully reduces their expenses.
Gov. Kevin Stitt announced a 120-day pause in enforcement of certain dyed-diesel rules in late September. He directed state agencies to adjust enforcement priorities involving dyed diesel used in highway vehicles and asked the Oklahoma Tax Commission to seek federal penalty relief from the Internal Revenue Service for qualifying users.
For Dillon Johnson, owner of Johnson Brothers Grain & Livestock in Ottawa County, the announcement comes as farmers continue to face higher fuel costs while working around the demands of the harvest season.
We previously spoke with Johnson about rising diesel prices and the effect they were having on his farming operation. In a follow-up interview, Johnson said farmers cannot simply delay their work until fuel becomes more affordable.
“They don’t wait for prices to go back down,” Johnson said. “We’re on the schedule of when the crop’s ready. We have to fire the combines up, get out there and cut.”
Johnson grows soybeans and wheat and operates a grain and livestock business. Diesel powers the machinery and vehicles needed to plant, maintain and harvest crops, making fuel an essential operating expense.
When crops are ready, farmers have a limited window to get them out of the field. Waiting for prices to fall is not always an option, Johnson said.
Dyed diesel, often called red diesel, is generally used in off-road equipment, including tractors and other agricultural machinery. It is typically subject to different tax treatment than clear diesel used in highway vehicles.
The governor’s announcement concerns a temporary pause in enforcement, not an automatic elimination of every restriction or tax requirement associated with dyed diesel.
Johnson said farms already use dyed diesel for much of their fieldwork. His operation has not yet started using it in trucks that travel on public roads, and he is still weighing what the change could mean for that part of the business.
One concern is what happens when the temporary pause ends. Johnson discussed the possibility of dyed fuel remaining in a truck’s tank after the 120-day period and the uncertainty surrounding how those situations would be handled.
That uncertainty makes it difficult to determine whether switching fuels would be worthwhile for his operation. Any potential savings would need to be weighed against the applicable rules and the risk of future enforcement once the pause expires.
Johnson said the combined state and federal taxes associated with diesel can amount to roughly 40 to 50 cents per gallon. For a farm purchasing large amounts of fuel, that difference could add up if the rules allow qualifying road-going vehicles to use dyed diesel without those taxes applying.
However, the temporary enforcement pause does not necessarily mean every farmer can immediately begin using red diesel in trucks that travel on public roads. Farmers will need clear guidance on which vehicles and circumstances qualify.
Nate Beaulac, who operates Prairie Creek Farms, said the policy could provide savings for some producers but may have a more limited effect on farms that rely heavily on highway vehicles.
Beaulac’s farm spans about 300 acres in Creek and Tulsa counties and raises pork, chicken, beef, eggs and turkey. Diesel is used to power tractors, grind feed and transport livestock.
Beaulac said his fuel costs have climbed from about $3.25 to $3.50 per gallon to between $5.95 and $6.50 per gallon, depending on where he buys it.
He said farms that store dyed diesel on-site and use it in eligible equipment could see some savings. But his operation also depends on trucks that use regular, clear diesel.
“I could see that saving them some money,” Beaulac said. “But honestly, I don’t anticipate it’s going to make any meaningful difference whatsoever. We’re still going to have to buy a lot of green diesel to keep this farm running.”
His experience illustrates why the potential benefit may vary across agricultural operations. A farm that uses most of its fuel in off-road equipment may have different options from one that relies heavily on trucks traveling between locations.
Johnson said he appreciates the attention given to farmers and views the governor’s announcement as a step toward relief. But he said changing enforcement priorities does not address the broader factors affecting diesel supply and prices.
“This regulatory exemption doesn’t create more diesel,” Johnson said. “You know, it doesn’t bring more refining capacity online.”
Johnson said his farm purchases about 50,000 gallons of diesel in total, with much of that fuel already being dyed diesel used in agricultural equipment. That means any additional savings would depend on whether the temporary change could help with fuel purchases beyond what the farm already uses in the field.
The effects of fuel prices also extend beyond the farm. Diesel is widely used to transport goods across the country, meaning higher transportation costs can affect businesses and consumers well beyond agriculture.
For farmers, fuel expenses are one part of the cost of producing and moving food. When those expenses rise, they put additional pressure on operations that still have to complete time-sensitive work.
The Oklahoma Corporation Commission said it supports Stitt and the Oklahoma Tax Commission’s efforts.
The commission said its role involving dyed diesel is handled through its Petroleum Storage Tank Division, which oversees matters such as tank integrity. Federal enforcement and penalties fall under the Internal Revenue Service.
For Johnson and Beaulac, the goal remains the same: keeping their operations running as efficiently as possible while managing higher costs.
