Diesel Prices to 77 percent to Hit $6.53 per
Gallon, US Mulls Export Ban
Diesel prices have been setting records
because of the war in Iran, but the oil industry say banning U.S. exports would
not make the fuel cheaper.
·
Possible export ban:
President Donald Trump said Tuesday that his administration is reviewing a
possible ban on U.S. diesel exports to reduce fuel costs for farmers,
truckers and businesses.
·
Reason for proposal: Some
Republican lawmakers are advocating an export ban as diesel prices have reached
record levels amid global supply shortages, attributed in the article to
the U.S.-Israeli war against Iran and the Russia-Ukraine conflict.
·
Iran war and refining capacity: Experts
cited in the article say the Iran conflict has been a major driver of the
recent diesel-price increase, particularly through reduced global refining
capacity.
·
Record U.S. diesel price:
According to AAA, the nationwide average diesel price reached $6.53/gallon,
compared with $3.69/gallon a year earlier—an increase of about 77%.
·
Impact on the economy: Diesel
is essential for trucks, trains, farm machinery and other heavy equipment.
Higher diesel costs feed into transportation and production costs and
ultimately raise prices of food and other goods.
·
U.S. diesel exports surge: U.S.
diesel exports have risen to more than 1.6 million barrels/day in recent
weeks, compared with approximately 1.1 million barrels/day before the war
began on February 28.
·
Diesel inventories under pressure: The EIA
expects U.S. diesel inventories to fall below 100 million barrels.
Inventories had already reached a five-year low in 2025.
·
U.S. position in global market: The
United States is described as the world's largest diesel supplier,
accounting for roughly 20% of the 8 million barrels/day of diesel traded by
sea globally.
·
Industry opposition: The
American Petroleum Institute (API) argues that an export ban could worsen
rather than ease shortages. Its position is that lower export demand could
cause U.S. refineries to reduce production, thereby tightening supply further.
·
API warning: API CEO Mike Sommers said
restricting U.S. energy exports could compound the disruption in global
refining capacity rather than provide relief to American consumers and
businesses.
·
Possible emergency action: Jim
Mitchell of Wood Mackenzie said Trump could potentially use emergency powers
to impose a temporary diesel-export ban.
·
Immediate price impact uncertain: Mitchell
cautioned that an export restriction would not necessarily produce a rapid
fall in diesel prices—there is no mechanism that would make diesel prices
decline substantially within a week.
Key Trade
& Energy Takeaway
U.S. diesel exports >1.6
million bpd → domestic inventories falling → diesel at $6.53/gal
→ administration considering export restrictions. The
central policy debate is whether retaining more diesel domestically would lower
U.S. prices or instead reduce refinery
production and aggravate both domestic and global shortages.
President
Trump told reporters on Tuesday that his administration is reviewing a possible
ban on U.S. exports of diesel to help lower fuel costs for farmers, truckers
and businesses.
Some
Republicans in Congress have been calling for a ban on exports as the cost of
diesel has hit records because of global supply shortages that have resulted
from the U.S.-Israeli war against Iran and the yearslong Russia-Ukraine
conflict. The Iran war in particular, experts say, has driven much of the
recent increase in diesel prices by reducing refining capacity.
Diesel
fuel powers trains and trucks as well as large machinery and farm equipment.
The record high prices for diesel means consumers ultimately pay more for food
and other products. According to AAA motor club, the nationwide average diesel
price was $6.53 a gallon on Tuesday, up from $3.69 a gallon a year ago.
“I’ve
called for it,” Mr. Trump said about a ban on diesel exports. “I’ve called for
it within my people. I’ve been talking about it.”
Rising
energy costs have become an enormous political headache for the president as he
tries to convince voters to elect Republicans in the November elections. Recent
polls have shown many of the party’s candidates, including those running in
what have long been regarded as safe Republican seats, in tight races with
Democrats or independents.
Global
demand for diesel fuel led to record-high exports from the United States this
year, topping 1.6 million barrels a day in recent weeks, according to the U.S.
Energy Information Administration. Before the war started on Feb. 28, the
country was exporting about 1.1 million barrels a day.
The
E.I.A. this month said that it expected U.S. inventories of diesel to drop below
100 million barrels. Inventories reached a five-year low in 2025.
The
American Petroleum Institute, which represents the country’s oil and natural
gas industry, contends that a ban on U.S. exports of diesel would not bring
relief to businesses and consumers. Instead, a ban would add to shortages by
prompting U.S. refineries to reduce production, exacerbating the global
shortage of the fuel.
The
United States is currently the world’s largest supplier of diesel, providing
about 20 percent of the eight million barrels of diesel traded by sea daily,
the industry group said in a statement.
“Americans
are hurting from rising diesel costs driven by an unprecedented disruption to
global refining capacity,” Mike Sommers, president and chief executive at the
petroleum institute, 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.”
Jim
Mitchell, director of oil trading analytics at the research firm Wood
Mackenzie, said Mr. Trump could use emergency powers to at least temporarily
ban diesel exports. But doing so might not result a big immediate reduction in
the price of the fuel.
“There
is no switch that can make diesel prices go down in a week,” Mr. Mitchell said.