What a Diesel Export Ban Would Mean for U.S. Consumers
· Time
As fuel prices at the pump reach record highs since the outbreak of the war in Iran, Washington is warming to the idea of a temporary diesel export ban as a way to lower costs.
“I’ve said let's not send out the diesel—we make a lot of diesel,” President Donald Trump said as he met with Ukrainian President Volodymyr Zelensky in New York on Tuesday. “That could have a little bit of an effect on regular automobile gasoline because when you do that, you know, it’s a sort of a flow.”
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Trump echoed what a cacophony of Republican lawmakers, many representing farm states, have called for in the past few weeks. Senator Chuck Grassley of Iowa posted on social media Saturday: “High diesel prices ARE KILLING FARMERS INCOME.” Senator Dan Sullivan of Alaska, meanwhile, said Tuesday that the cost of diesel “is just too damn high” and an export moratorium should be in place until the conflict in Iran ends.
Diesel recorded its highest average price on Tuesday amid the energy dearth caused by the war, averaging about $6.53 per gallon, according to the American Automobile Association. It is at least 90¢ higher than last month’s average, and a huge leap from the $3.75 mean just before the war.
Ballooning prices threaten to impact the global economy as diesel powers most heavy-duty farming and industrial machinery as well as transport like trucks and trains. Higher diesel costs also add to the cost of moving goods and could worsen inflation, which the Federal Reserve has tried to tamp down.
Trump referred to Treasury Secretary Scott Bessent, who said that the Administration is examining whether a diesel export ban is “feasible in terms of the overall refining capacity and whether a full or partial ban would work.”
It’s unclear if, or when, the Administration will decide on a moratorium on diesel exports. Trump’s own Energy Secretary Chris Wright showed more skepticism: speaking to CBS News earlier this month, Wright said the U.S. is considering “all options of how you can move prices that are favorable for American consumers,” but he also argued that to address a shortage, “you want to keep as much energy flowing as possible.”
Rising costs present a problem for an increasingly unpopular Trump heading into the November midterms, where the Republican Party he leads has to defend its slim majority in Congress. Disgruntled voters, according to some polls, believe the U.S. economy has suffered under Trump’s policies, with many from the GOP also souring on them.
Analysts say ban would give swift, but fleeting, relief
The U.S. is one of the world's largest diesel producers and exporters. Data from the U.S. Energy Information Administration show that American refineries produce about 5.3 million barrels of distillate fuel oils—referring to fuels that include diesel and home heating oil—per day. Diesel exports amount to about 1.5 million barrels daily, almost a fifth of the roughly 8 million barrels traded by sea each day.
But since diesel is traded globally, prices in the U.S. are shaped by this balance of supply and demand. The recent price surge has been linked to production and shipping disruptions from the wars in Ukraine and Iran.
Many Republican lawmakers pushing for the diesel export ban argue that it could provide American consumers with some relief. Last week, Rep. Tim Burchett of Tennessee filed bills to address rising diesel costs through export controls and argued that such controls “drive down prices while also helping Americans keep more money in their pockets.”
Senate Majority Leader John Thune of South Dakota also indicated that he was “open to exploring” a diesel export ban to lower prices.
Analysts from the Washington think tank Atlantic Council wrote in a Tuesday note that such an export ban “would likely create more problems than it would solve.”
While the ban is expected to “almost certainly” push prices down for consumers in the Gulf Coast and the Midwest, it may pull prices up for those on the West Coast. “If the global price of diesel rises and supplies in the heartland cannot be routed to the coasts quickly enough, then these regions could see higher prices,” the analysts wrote. They also warned of knockon effects including a possible uptick in grocery prices.
Garrett Golding, assistant vice president at the Federal Reserve Bank of Dallas, said in a social media thread on Monday that even with the swift dip in diesel prices, a diesel export ban would tighten the global balance enough to cause price increases that “will boomerang back” onto the East Coast—and to a smaller degree, the West Coast.
Refineries will also have to reduce their run rate—the percentage of a refinery’s maximum capacity used to process crude oil into refined products, Golding added. This would lead to reduced production of gasoline, jet fuel, and other refined products, “which means higher prices.”
The Atlantic Council analysts also warned that an export ban would have follow-on effects outside of the U.S., including pushing international diesel prices up, which could similarly “boomerang” on the country.
The API opposes a ban and argues that doing so risks “making a difficult situation worse.” President and CEO Mike Sommers said in a statement, “We understand the administration is looking at every option to deliver relief, but restricting U.S. energy exports would only compound the problem—exacerbating refining challenges and ultimately hurting consumers.”
Politics fuels energy policy
The diesel export ban has been a point of contention for GOP lawmakers ahead of the November elections. Some from oil-producing states argue against the proposal on the basis that a ban could push prices down for producers under their jurisdiction.
Outgoing Senator John Cornyn of Texas, the largest oil-producing state in the U.S., claimed that the ban is a “gimmick.”
Cornyn’s colleague, Senator Lisa Murkowski of major oil producer Alaska, cast her doubts on the export ban to the Hill: “We’re talking about global supply, so I worry that we do something in the short-term … that doesn’t really move the needle.”
Senator Mike Rounds of South Dakota also expressed criticism and said he is instead looking to other options, including restarting idled refineries. “The bigger problem we’ve got right now is, as I understand it, in California, we’ve already lost two more refineries because of California’s strict environmental rules,” Rounds told the Hill. “I would like to get those back up and operational again.”
The reactions exhibit how keen Republicans are to appear that they are providing solutions to the rising costs of living. As Reuters’ energy columnist Ron Bousso put it, fuel costs are increasingly becoming a political liability, and for the wider GOP, “a politically popular ‘quick fix’ may prove difficult to resist.”