Gov. JB Pritzker declared the entire state a disaster area on Tuesday due to the rising cost of diesel fuel and took executive action aimed at reigning in prices.
The move comes on the heels of an executive order signed by President Donald Trump allowing the use of tax-exempt, red-dyed diesel fuels on highways. While farmers, particularly within the state’s Republican Party embraced the orders, the head of the state’s fuel industry trade organization said he is skeptical that they’ll have the intended effect.
“I don’t really think that the federal government really thought this through when they were wanting to issue this in an election year,” Nate Harris, CEO of the Illinois Fuel and Retailer Association, said in an interview.
Diesel prices in Illinois rose from $3.73 last year to $6.64 this year, a 78% average increase, according to AAA Fuel Prices. This comes because of both international circumstances, like the Iran War and the Ukraine War, as well as local influences, like the weeklong shutdown of the ExxonMobil refinery in Joliet.
“Red dye” diesel is no different from regular diesel chemically. It is mixed with a red dye to show it’s exempt from highway taxes because it is intended for off-road farming equipment. This lets regulators and inspectors tell it apart from other road diesel.
The governor’s executive order directs the Illinois Department of Revenue and the Illinois State Police not to impose penalties for selling or using dyed diesel fuel through Dec. 31.
Illinois House GOP farmers praised Trump’s move in a news release Tuesday.
“We appreciate President Trump taking the lead to provide relief to farmers facing rising diesel costs,” the release said. “Farmers across Illinois are feeling the pinch from every direction. While this is a step in the right direction, Illinois needs to take a more proactive approach to lower the cost of doing business and keep the top industry in Illinois competitive.”
But Harris said retailers are looking for further clarification at both the federal and state levels.
He said the federal order suspends the tax and leaves retailers responsible for remitting it in January, while at the state level it remains unclear whether criminal penalties for distributors who sell dyed diesel for on-road purposes will remain.
“My advice to all retailers is that they should not be doing this until there’s further clarification,” said Harris. “They’re putting themselves at criminal risk if they do so.”
The governor of neighboring Indiana also signed a similar executive order on Sept. 30 that relieves penalties on red-dyed diesel, effective through Nov. 4. But differences in how other states respond to the federal order can create issues for interstate workers, Harris said.
“The states surrounding us all have different versions of their own state waivers. So if a trucker in Illinois goes over to Indiana and fills up with dyed diesel, but then comes back to Illinois, does that put them in violation?” Harris said.
Pritzker’s order also directs the Illinois Department of Transportation to consider extending the Illinois Harvest Permit program, which allows heavier truck weights on specified routes, into 2027.
The impact on farmers and retailers
Illinois is the third-largest exporter of agricultural goods in the country. It ranks first in soybean exports, valued at $4 billion in 2024, and is the second-largest exporter of corn, valued at $2.1 billion.
The problem with rising diesel prices is that some farming businesses cannot pass the increase to their customers, Rodney Knittel, the Illinois Farm Bureau Associate Director of Transportation and Infrastructure, said.
“When we sell our commodities, we don’t get to add price to our commodity,” Knittel said. “We can’t add to our product because our product is determined by a market.”
The farmers can buy the “red dye” diesel in bulk to save on expenses, Knittel said.
“If a farmer is buying that red-dye diesel in bulk by the semi-load or by truckload and getting it at a cheaper rate, then that’s really where probably the cost savings and the benefit of the executive orders kind of fall into place,” Knittel said.
But Knittel said farmers also need an exit strategy for using red-dyed diesel, because the residuals can stay in the tank for several refills even after non-dyed diesel is used. The dye stays in tanks for several months, creating an even bigger problem for retailers, Harris said.
After Jan. 1, if the Illinois Department of Revenue does not extend the waiver period, both Illinois farmers and retailers could be subject to penalties.
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