Yup just R&R. If it was a single wire I'd say don't use teflon tape or paste but this one has a reference ground or +5v reference connection from the ECM... either way it's not depending on an electrical connection from the engine. I'd lean toward the blue or yellow Gasolia petroleum resistant Teflon paste rather than tape because it's neater. The Blue stuff is used on LP and Natural gas lines and it eventually dries and lightly locks the thread against vibration similar to blue Loctite. The yellow stuff remains tacky. Either will work here.
I use the paste too, but mine is white. I think I have two tubes, one newer and I assume water based, and the older one has an oil carrier. I don't think I've seen yellow. I think I used blue on something, but only because I was at my uncles, and that's what he had... I can't think of what I was working on, Though.
Edit: It might have been on the differential fill plug, where I used the blue stuff.
I don't like using tape.
OP, get rid of those wire nuts. That seems like it's asking for a corroded connection to me. I would probably use crimp butt connectors with the heat shrink cover, and dip the wire ends in dielectric grease before hand.