President Donald Trump’s economic advisers are analyzing a potential short-term ban on U.S. diesel exports as national prices hit a record $6.53 a gallon. The proposal, fueled by midterm political pressure and spiking costs for agriculture and transport, faces fierce warnings from energy analysts who say restricting shipments could backfire and drive global fuel prices even higher.
Record Diesel Prices and the Political Pressure for an Export Ban
Average U.S. diesel prices surged to a record $6.53 a gallon on Tuesday, marking a 77% increase from a year prior, according to data from the motorists’ association AAA.
The soaring costs hit agricultural, trucking, and construction sectors hard, creating a major political liability for Republicans ahead of the November midterm elections. A Reuters/Ipsos poll conducted in August found that 47% of voters viewed the cost of living as the single most important factor in their voting decisions—more than twice the share who cited democratic values and norms.
Republican lawmakers representing agriculture-heavy states have seized on the issue. Senator Chuck Grassley of Iowa and Representative Ashley Hinson called for American energy companies to be barred from selling diesel outside the U.S.
W diesel $6.57 in Iowa why doesn’t Pres Trump put an embargo on diesel exports like presidents in the 70s put embargoes on ag products bc food prices were inflated.
Senator Chuck Grassley, via CBS News
In the House, Representative Tim Burchett introduced two bills on September 17: one would ban diesel exports through January 2027, while the other would trigger a restriction if the national average hits $5 a gallon.
Inside the White House Review and Voluntary Industry Talks
President Trump confirmed on Tuesday that his administration is evaluating the measure. I’ve called for it,
Trump said regarding an export ban, adding, I’ve called for it within my people. I’ve been talking about it.
National Economic Council Director Kevin Hassett, Treasury Secretary Scott Bessent, and U.S. Trade Representative Jamieson Greer are conducting a study to inform the administration’s decision-making, according to Republican Senator John Hoeven of North Dakota. Administration officials noted that no final decisions have been reached.
Parallel to the White House review, Energy Secretary Chris Wright communicated with major oil refiners to gauge interest in a voluntary restriction on diesel exports, according to reporting cited by Al Jazeera.
Global Supply Disruptions and the Mechanics of U.S. Production
While the U.S. is the world’s largest diesel exporter, shipping a record 1.6 million barrels per day in August, diesel is traded on an interconnected global market. Domestic refiners produce about 5.3 million barrels per day of distillate fuels—including diesel, home heating oil, and jet fuel—against domestic consumption of roughly 3.6 million barrels per day.
Global prices have spiked due to severe production and shipping disruptions. Ukrainian drone strikes and military attacks have damaged major refineries in Russia, forcing Moscow to implement a moratorium on its diesel exports through September. Meanwhile, the U.S.-Iran war has disrupted key trade routes in the Strait of Hormuz and the Red Sea, hobbling refining operations in the Middle East.
Why Energy Analysts Warn an Export Ban Could Backfire
Energy experts and industry groups argue that forcing diesel to stay within the United States misdiagnoses the root cause of high prices and could trigger severe unintended consequences.
Diesel trades on a world market, just like corn. farmers don’t sell cheaper to Americans, and refiners can’t either since they buy crude at global prices. force a lower price and they’ll make less diesel.
Patrick De Haan, head of petroleum analysis at GasBuddy, via Al Jazeera
Once storage is exhausted, refiners would be forced to cut crude runs, reducing production of gasoline and other products. Given that a surplus of diesel in the US could paradoxically force American refiners to cut supplies of oil products – potentially within a few weeks – a ban would ultimately be self-defeating,
Capital Economics said in a note.
Other industry voices raised similar alarms. Capital Economics added in a note that the policy would ultimately be self-defeating, while energy economist Philip Verleger estimated that a ban could raise world prices by as much as 100% given the fuel’s low price elasticity of demand.