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Trump Supports Diesel Export Ban Amid High Prices

5:11 PM ETConfirmed

World Desk

In Short: With diesel prices at record highs, restricting US diesel exports could initially lower prices in parts of the US, particularly along the Gulf Coast where much of the exported fuel is produced.

US President Donald Trump has expressed support for a ban on diesel producers selling overseas, citing surging fuel prices that have hit drivers ahead of the midterm elections.

Diesel prices are near a record $6.45 per gallon on average, according to the American Automobile Association (AAA), due to the ongoing US-Israel war with Iran and tight global supplies.

The US is one of the world's leading energy producers, with domestic refineries churning out roughly four to five million barrels of diesel every day, according to the US Energy Information Administration (EIA).

Trump's comments mirror remarks made at the United Nations General Assembly, where he stated that he had called to “not send out the diesel.”

UK Chancellor John Healey has told BBC News that the UK is in talks with US authorities over a potential diesel export ban and has started preparing for it.

Trump and his backers argue that a US diesel export ban would protect domestic consumers from rising costs, but experts warn it could trigger major economic waves both at home and globally.

Between 60% and 70% of the exported fuel goes to Latin America, making the US a vital supplier to the global market.

Diesel primarily fuels commercial vehicles in the US, such as freight trucks, farm machinery, and cargo trains, which are used for transporting goods and construction.

With diesel prices at record highs, restricting US diesel exports could initially lower prices in parts of the US, particularly along the Gulf Coast where much of the exported fuel is produced.

However, an export ban does not create another barrel of diesel, and in a tightly interconnected global market, costs pushed overseas can eventually find their way back to American consumers.

Few industries have more reason to want lower diesel prices than agriculture, which relies on diesel to power tractors, combines, irrigation equipment, and trucks that move crops.

The US currently supplies about 20% of the world’s global diesel exports, according to the American Petroleum Institute (API), which is sharply against an export ban.

What this adds

Background

What's confirmed

• US President Donald Trump has expressed support for a ban on diesel producers selling overseas, citing surging fuel prices that have hit drivers ahead of the midterm elections.
• Diesel prices are near a record $6.45 per gallon on average, according to the American Automobile Association (AAA), due to the ongoing US-Israel war with Iran and tight global supplies.
• The US is one of the world's leading energy producers, with domestic refineries churning out roughly four to five million barrels of diesel every day, according to the US Energy Information Administration (EIA).
• UK Chancellor John Healey has told BBC News that the UK is in talks with US authorities over a potential diesel export ban and has started preparing for it.
• Trump and his backers argue that a US diesel export ban would protect domestic consumers from rising costs, but experts warn it could trigger major economic waves both at home and globally.
• Between 60% and 70% of the exported fuel goes to Latin America, making the US a vital supplier to the global market.
• Diesel primarily fuels commercial vehicles in the US, such as freight trucks, farm machinery, and cargo trains, which are used for transporting goods and construction.
• With diesel prices at record highs, restricting US diesel exports could initially lower prices in parts of the US, particularly along the Gulf Coast where much of the exported fuel is produced.
• However, an export ban does not create another barrel of diesel, and in a tightly interconnected global market, costs pushed overseas can eventually find their way back to American consumers.
• Few industries have more reason to want lower diesel prices than agriculture, which relies on diesel to power tractors, combines, irrigation equipment, and trucks that move crops.
• The US currently supplies about 20% of the world’s global diesel exports, according to the American Petroleum Institute (API), which is sharply against an export ban.

What's still developing

• Keep more American-made diesel at home, increase domestic supply, and take some pressure off farmers, truckers, construction companies, and ultimately consumers.
• President Donald Trump endorsed the idea this week, saying, “I’ve said let’s not send out the diesel.” The administration is now examining possible restrictions as farm-state lawmakers respond to soaring fuel costs.
• That pressure has helped generate calls from farm-state Republicans for limits on diesel exports.
• Fuel oil deficit forecast at 218,000 barrels per day in third quarter as Middle East exports plunge 45%; Singapore bunker prices have risen 76% since Iran war began LONDON: A global shortage of fuel oil used by ships and power plants is looming in the third quarter as war-related refinery and shipping disruptions constrain supplies, while refiners increasingly divert fuel oil towards producing more profitable diesel, gasoline and jet fuel.
• Ukrainian drone attacks have affected Russian refinery operations, pushing the country's fuel oil exports to a record low of 591,000 bpd in August, according to Kpler data dating back to 2017.
• Nigeria's 650,000-bpd Dangote refinery, for instance, has increased exports of diesel, gasoline and jet fuel while reducing fuel oil shipments, according to Kpler.
• Energy Aspects analyst Royston Huan said record-low gasoline and diesel inventories would encourage refiners globally to maximise the use of secondary processing units, consuming more fuel oil as feedstock and further tightening supplies.
• China has also reduced refining capacity and exports as it seeks to conserve domestic stocks.
• The impact is particularly pronounced in fuel oil, which refiners can use as feedstock in secondary processing units to produce higher-value products such as diesel and gasoline.
• All these ripple effects would push oil prices and gasoline and jet fuel costs even higher, while further exacerbating diesel costs globally—keeping in mind that fuel costs are even higher in the rest of the world than in the U.S. “If diesel exports get banned, [gasoline] prices could rise toward record levels,” said Patrick De Haan, head of petroleum analysis at GasBuddy.
• Donald Trump is very focused on so-called U.S. energy dominance, and an export ban flies in the face of that, said oil forecaster Dan Pickering, founder of the Pickering Energy Partners consulting and research firm.
• Keep the diesel at home and prices will fall, sparing farmers, truckers, and inflationary pressures on all Americans.

Sources

• BBClink
• Crude Oil Prices Today | OilPrice.comlink
• Fortunelink
• Investinglivelink
• Nebraska Examinerlink
• Washingtonsunlink
• Profitlink
• Ukrinformlink
• Fxstreetlink
• BBClink
• Prosharelink
• NBC Newslink
• Motortradenewslink
• Thediplomatlink
• Oilpricelink
• WarpBeat — background on Trump Rejects Call for Diesel Export Ban Despite High Prices link
• Fox Business — video link