US diesel prices have surged to record levels, putting more pressure on businesses that depend heavily on diesel for transportation, farming and other operations. The increase has come as the Iran war continues, disrupting global fuel markets and pushing up the cost of diesel.
One major concern is that an export ban could reduce the money US energy companies earn from selling diesel. If energy companies make less money, they could respond by cutting production. This creates a transportation problem. Having more diesel on the Gulf Coast does not automatically mean there is enough diesel available in New York, California or other areas facing shortages. The law directed the president to largely restrict exports of US-produced crude oil.
After the 1973-74 Arab oil embargo, gasoline prices jumped sharply and Americans faced long lines at gas stations. In response, Congress passed the Energy Policy and Conservation Act of 1975. Because they could potentially sell it later at higher prices, according to Yahoo Finance, samantha Gross, director of the Energy Security and Climate Initiative at Brookings, said price controls during an earlier period encouraged refiners to hold back gasoline rather than sell it immediately,.
Tobin Marcus, head of US policy and politics at Wolfe Research, said Trump appears to want to respond to demands for relief. But Marcus also said the White House understands that an export ban could create unintended consequences, according to Yahoo Finance. Joe Brusuelas, chief economist at RSM US, said lower diesel prices caused by an export restriction could reduce revenues across the US energy industry, according to Yahoo Finance. GasBuddy petroleum analyst Patrick de Haan said the US would have difficulty moving the extra fuel around the country, according to Yahoo Finance.
The US has used export restrictions during an earlier energy crisis.
The Trump administration is reportedly considering a 90-day ban on US diesel exports as one possible way to increase fuel supply inside the country. If introduced within the next few days or weeks, the ban could remain in place roughly until the end of 2026, according to Yahoo Finance. The reported plan was first detailed by Politico.
The basic idea behind the proposal is simple: keep more diesel in the US instead of sending it overseas. The administration hopes that putting more diesel into the domestic market would increase supply and eventually push US diesel prices lower. However, fuel experts and economists warn that the plan could have unexpected economic effects and may not solve the main reasons behind record diesel prices.
