Surging US gasoline and diesel costs are prompting discussions within the Trump administration about potential policies to curb fuel inflation ahead of midterm elections. One measure under consideration, though viewed as a far-fetched but not impossible idea, is banning American exports of key refined products like diesel and gasoline. This comes as US retail diesel prices have exceeded $6.50 per gallon for the first time, rising by more than $0.87 this month and surpassing the 2022 peak, with some California pump prices even exceeding $10 per gallon.
The primary driver of these high prices is the US war against Iran, which has led to the effective closure of the Strait of Hormuz, along with extremely high refining costs. The US exported approximately 1.8 million barrels per day of diesel and similar products last month, in addition to 440,000 barrels per day of jet fuel. The significant volume of exports is fueling political pressure to enact a ban to address domestic price increases.
However, a ban on diesel exports could have several negative consequences. Refiners, unable to export surplus diesel, would likely shift production to other products like jet fuel and gasoline, which could then see price increases. It could also lead to reduced refinery utilization and maintenance, ultimately decreasing the overall supply of refined products. Critics, including Interior Secretary Doug Burgum and the American Fuel & Petrochemical Manufacturers, argue that an export ban would not lower prices, could invite retaliatory measures from other countries, and would damage the US's reputation as a reliable energy exporter. They emphasize that the US is the world's largest exporter of diesel, with recent weekly exports ranging from 1.5 million to 1.9 million barrels per day.
