With diesel prices still near record highs, federal relief set to expire December 31, and additional fuel costs on the horizon, Associated Oregon Loggers (AOL) is urging Governor Tina Kotek and incoming lawmakers to provide relief for Oregon’s forest operators that are struggling to absorb rising costs and stay in business.
Diesel prices in Oregon reached a record $6.87 per gallon on September 23, a 53% increase from the previous year, and were still $6.60 as of November 10, according to AAA. For an industry dependent on heavy equipment and trucking, these costs are unavoidable. AOL’s members rely on diesel to power logging equipment, fire trucks, log trucks, dump trucks, and lowboys.
AOL appreciates the President’s October 5 Executive Order 14435
“”, which directs temporary federal relief for highway use of dyed diesel, including deferral of the 24.5 cent per gallon federal excise tax, federal penalty relief, and related IRS guidance. That relief expires December 31, and the deferred federal tax has not been forgiven. Recognizing the importance of this relief, AOL led a coalition of natural resource trade associations representing Oregon’s forestry and agricultural sectors in requesting corresponding state action.
Governor Tina Kotek responded October 27, calling Oregon’s agriculture and forest products sectors “a cornerstone of our state’s economy” and acknowledging that businesses facing tight margins and rising costs are “in need of relief.” She confirmed that the federal dyed diesel penalty relief applies in Oregon without additional state action but said she does not have the authority to waive or modify state fuel tax rates. Her response provides needed clarity, but it addresses tax rates rather than the coalition’s request to delay collection of Oregon’s use fuel tax during the federal relief window, and it leaves the larger question of state tax relief unresolved.
“These are critical small businesses with large economic importance in rural communities,” said Joe Justice, AOL Executive Vice President. “Our members always operate with thin profit margins, but the current fuel costs are consuming those margins.”
The pressure will only intensify as Oregon’s Climate Protection Program (CPP) advances. Its declining emissions limits create compliance costs for fuel suppliers that AOL expects will be passed on to consumers. Industry estimates project diesel price increases of up to 39 cents per gallon by 2035. The Governor’s own Prosperity Council has also recommended replacing the CPP with a market-based program like those in Washington and California, and the Governor said in June that she was ready to work with the Legislature on that approach. Lawmakers are expected to take up road funding again in 2027, months after 83% of Oregon voters rejected a fuel tax increase. With fuel prices already straining rural businesses, the question is what additional relief Oregon can deliver through legislation or regulatory action.
“Oregon depends on these businesses to harvest timber, maintain forest roads, restore forest health and respond to wildfires,” Justice said. “When logging contractors can no longer afford to operate, we lose skilled workers and the capacity to manage our forests. Once these businesses close, that capacity is extremely difficult to replace.”
AOL urges Governor Kotek to ask the incoming Legislature for targeted fuel and road-use tax relief, in the budget she will propose by December 1 or in legislation for the session that convenes January 19, and to reconsider CPP implementation before additional costs further threaten Oregon’s forest industry. AOL also urges Oregon’s congressional delegation to press for forgiveness of the deferred federal tax and a grace period for dyed fuel left in tanks before federal relief expires December 31. Oregon’s forests, rural communities, and wood products supply chain depend on keeping forest operators in business.
