Diesel prices have reached record highs as tensions between the United States and Iran and the war between Russia and Ukraine disrupt key oil and fuel trade routes.
The average price of diesel was $6.50 a gallon (3.79 liters) on Friday, up from $5.61 a month earlier, according to the American Automobile Association (AAA), which tracks daily fuel prices.
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The surge has prompted President Donald Trump’s administration and Republican lawmakers to consider restricting U.S. diesel exports ahead of the upcoming midterm elections.
A Reuters/Ipsos poll conducted in August found that 47% of voters said the cost of living was the most important factor in deciding whether to vote in the midterm elections, and more than twice as many said “democratic values and norms” as the next most important issue.
The latest Marist poll also found that Americans trust Democrats more than Republicans to run the economy, with 42% choosing Democrats compared to 34% choosing Republicans.
Amid this voter sentiment, U.S. Energy Secretary Chris Wright said on Thursday that he is in contact with major oil refiners to gauge their interest in possible self-regulation of diesel exports, Reuters reported.
This comes after President Trump said on Tuesday that he supports restricting diesel exports from the United States, the world’s largest diesel exporter.
Energy analysts and industry groups have warned that the export ban could have unintended consequences, pushing up fuel prices in the U.S. and abroad.
Why are diesel prices so high?
The United States is the world’s largest exporter of diesel, but diesel is traded on global markets.
Disruptions at refineries in Russia and the Middle East have reduced the amount of fuel available around the world, putting further pressure on U.S. producers to fill the gap. In Russia, for example, drone attacks have damaged major oil refineries, forcing them to reduce or halt production.
“While U.S. refineries are operating at full capacity than usual, global disparities remain,” Rachel Ziemba, senior adjunct fellow at the Center for a New American Security, told Al Jazeera.
This comes as diesel supply in the United States is also shrinking. As of Sept. 11, inventories had fallen to 107.9 million barrels, the lowest in more than 40 years, according to the U.S. Energy Information Administration.
Diesel prices are rising around the world, including the United States, due to global supply constraints. Because U.S. producers can sell their fuel to global markets, they are attracted to higher global prices rather than simply setting lower prices for domestic consumers.
Why is the US considering an export ban?
In Washington, D.C., leaders are toying with the idea of encouraging U.S. companies to halt or slow diesel exports.
Republicans are calling for a slowdown or outright ban on exports to reduce costs for consumers ahead of crucial midterm elections in which the cost of living is a key issue.
Ziemba said he hopes these measures will lower local diesel prices, which is important because diesel is used in trucks that transport food and most products, adding that U.S. diesel exports account for about 40% of domestic consumption.
On Tuesday, Iowa Republican Chuck Grassley called on the president to temporarily suspend exports.
“I encourage President Trump to temporarily impose an embargo on diesel exports through executive action,” Grassley said.
Sen. Dan Sullivan, R-Alaska, made a similar call. “Diesel prices are too high. We call for a moratorium on U.S. diesel exports so we can rebuild our stockpiles for the winter,” Sullivan said in a statement Tuesday.
Representative Tim Burchett of Tennessee has introduced two bills in the House of Representatives that would limit U.S. diesel exports. One would impose a ban until January 2027, and the other would limit exports if the national average price reaches $5 a gallon.
The administration has not announced any official policy, and the White House told Al Jazeera that the president is considering all options.
Oil and gas industry experts say a ban could cause prices to rise rather than fall.
“Diesel, like corn, trades on the world market. Farmers can’t sell it cheap to Americans, and refiners can’t because they buy oil at world prices. Forcing prices down means less diesel production. Less supply means higher prices, not lower prices,” Patrick de Haan, GasBuddy’s head of petroleum analysis, said in a post on X.
How does an export ban work?
A ban would prevent or restrict U.S. refiners from selling diesel to foreign buyers, theoretically making more fuel available on the domestic market.
Analysts at research and consulting firm Wood Mackenzie say having more diesel in the U.S. will eventually not only fill up U.S. storage tanks but also force refineries to cut production. This could have implications for other markets that rely heavily on U.S. fuel, such as Latin America and Europe, forcing them to compete with other global buyers for supplies and pushing up prices on global markets.
Wood Mackenzie says China is the only major producer with enough refining capacity to potentially cover most of the shortfall.
“China is currently the only country with surplus refining capacity for materials that could cover the loss of U.S. refinery capacity. However, there is a good chance that China will decide that it is not in its interest to intervene,” the analysts said.
Wood Mackenzie warned that the ban could quickly fill U.S. diesel inventories, force refiners to cut crude oil production and increase U.S. gasoline imports.
This was a view echoed by S&P Global’s analysis, which said a complete ban could mean lower production as storage capacity fills up with unsold diesel. According to the analysis, this could lead to production cuts of up to 750,000 barrels per day, and the United States could become a net importer of gasoline in the fourth quarter of this year.
Who does the export ban affect?
The export ban would impact not only U.S. refiners and consumers, but also countries that rely on U.S. diesel.
“They (export bans) may provide temporary relief, but diesel is a global commodity. Once you treat one part of the system, the effects will be felt elsewhere. Trade-offs are inevitable. Refiners are unlikely to support a total ban. Voluntary and controlled export cuts will generally not be as disruptive in the short term,” Maksim Sonin, a visiting scholar at Stanford University’s Precourt Energy Institute, told Al Jazeera.
Disruptions to U.S. exports could reduce the amount of fuel available on global markets. Wood Mackenzie analysts say European and Latin American countries that rely heavily on U.S. fuel could be forced to compete with other producers for supplies.
“If implemented, this would lead to higher product prices in Europe and Asia as buyers of U.S. fuel, primarily in Latin America, scramble for new supplies and compete for supply. European crack spreads could widen and we may see more disruption overall,” Ziemba added.
“Given these issues, the United States may choose a combination of carrots and sticks to encourage refineries to continue producing, perhaps including penalties for production cuts. There may be voluntary export quotas rather than formal bans, and exemptions may be created for countries that supply crude to the United States, such as Mexico,” Ziemba said.
That could put pressure on gas pumps as well as empty consumers.
Airline industry trade group Airlines for America also warned that the export ban could lead to higher prices for airlines and travelers, Reuters reported. The industry group did not respond to Al Jazeera’s request for comment.
Analysts’ broader concern is that rather than simply diverting diesel to American consumers, export restrictions could reduce production at U.S. refineries and put upward pressure on fuel prices at home and abroad.
“Given the failure to resolve the underlying problem, it is unlikely to help American consumers much and could backfire if refineries continue producing. The best way to address this is to end the conflict that is causing the shortage,” Ziemba said.
