As global oil supplies continue to shrink and fuel prices rise, the governor of Texas has declared a state of emergency due to diesel fuel shortages.
Declaring a state of emergency can unleash the government’s ability to temporarily modify certain policies in order to protect the public: in the case of Texas, this includes waiving restrictions on what is known as dyed diesel.
Texas Governor Greg Abbott issued Emergency notification on monday.
“The diesel fuel shortage poses an imminent threat or harm to the public health and safety of the State of Texas,” the notice said.
“Diesel fuel shortages will have adverse impacts on the agriculture and ranching industries by increasing the price per acre for similar returns, reducing investment in farm and ranch machinery, and increasing supply chain expenses.”
Abbott also states that truckers and construction companies face higher costs that make it difficult to maintain operations or spend on new projects.
This also comes after US President Donald Trump threatened to ban US diesel exports, with supplies under pressure as a result of the repeated closures of the Strait of Hormuz due to his war with Iran.
Ofer Baron, distinguished professor of operations management at the Rotman School of Management, says the United States is trying to maintain its presence as a superpower by using its energy influence wherever it can.
“If you look at some of the international actions that the US regime has taken over the last 12 months or so, they are very focused on the energy market,” Baron says.
“It is clear that before the upcoming midterm elections next month, there is pressure on this main goal.”
Related videos
What has changed in Texas?
Abbott says his government is taking specific steps to suspend some regulatory measures, including the use of diesel fuel, weight limits on commercial shipping, and some diesel emissions standards in order to provide financial relief amid global pressure on diesel.
Get daily national news
Get Canada Daily News delivered to your inbox so you don’t miss the day’s top stories.
Barron says these measures could provide some short-term relief for American consumers and businesses, but it’s not clear whether they are sustainable solutions to affordability.
Dyed diesel is, quite literally, red because of an additive used to identify it as a fuel used mainly for off-road purposes, such as agriculture and construction, which do not require a motor fuel tax.
Easing restrictions on on-road diesel use allows companies to tap into their off-road fuel inventory for commercial road transportation and bypass the costs of the retail fuel tax, where they may face record high diesel prices.
The proclamation also states that vehicles loaded with fuel, agricultural or wood products weighing up to 95,000 pounds will not be required to carry additional government permits for being oversized or overweight.
Finally, the governor has formally asked the EPA to waive certain diesel fuel rules in place in Texas, which he says will remove some of the limits on what diesel can be sold, and has also requested a waiver to allow more fuel to reach the pumps in the state.
“What needs to be considered is, does this have any second-round effects on other parts of the economy? Because if you’re going to put in place a policy that provides relief somewhere, but provides stress somewhere else, it’s worth questioning the effectiveness of that policy,” says economist Mark Ercolau of TD Economics.
“In this case in Texas, it could very well have local positive impacts in diesel. But if that has other impacts on other fuels, you could end up at an equilibrium point where it’s neither beneficial nor detrimental.”
Could similar measures work in Canada?
Canadian consumers and businesses are also facing higher gas and diesel prices, and the Bank of Canada has warned that the longer oil and gas prices remain high, the more likely those higher prices will be reflected in other areas such as food, housing and almost everything else.
The Federal Government has extended the moratorium on the fuel excise tax until the end of January 2027, bringing immediate relief at the pumps for both regular and diesel fuel as well as jet fuel when it was introduced earlier this year. The tax will then return to a rate of 50 percent from February 1 to March 31, 2027.
But diesel prices have risen faster than regular gasoline.
In Canada, the national average for diesel fuel is about C$2.60 per litre, according to Natural Resources Canada, up from $2.35 last month, and about $1.54 last year.
The Canadian national average price for regular gas is about $1.75 a litre, according to the Canadian Automobile Association, compared with $1.71 last month and $1.35 last year.
Conservative Leader Pierre Poilievre has proposed eliminating all taxes on diesel sales until at least Canada Day by extending the full fuel tax cut until July 1 of next year and removing the GST from fuel purchases.
Specialized quick fixes, such as in Texas, may not be necessary in Canada because of the country’s refining capacity, or ability to produce more diesel fuel for consumption, and tax credit measures may be more effective, Ercolau says.
“Most of the relief measures we have seen here have come through taxes and domestic consumption, such as being able to meet domestic demand through our production and refining,” says Ercolau.
“In terms of the current tax credit, it certainly provides that relief at gas stations, and for diesel as well. That’s a net positive for consumers and businesses.”
– With a file from The Canadian Press
&Copy 2026 Global News, a division of Corus Entertainment Inc.
