Diesel Export Ban Proposals Spark Debate Amid Record-High Fuel Costs
Lawmakers push for a U.S. diesel export ban to combat record $6.53 prices, but energy experts warn the strategy could backfire and worsen global shortages.
POLICY WIRE — Washington, D.C. — As diesel prices climb to a record average of $6.53 per gallon, a 77% increase over the past year according to AAA, some Republican lawmakers are advocating for a federal ban on U.S. diesel exports to provide relief to domestic consumers.
The surge in fuel costs has placed significant financial strain on the construction, trucking, and agricultural sectors. In response, Iowa Republican Sen. Chuck Grassley and Rep. Ashley Hinson have called for a prohibition on selling American diesel to foreign markets, suggesting such a move would lower costs for domestic businesses and farmers.
Tennessee Rep. Tim Burchett has taken legislative action, introducing two bills on Sept. 17. One proposal seeks to block diesel exports through January 2027, while the other would trigger an automatic export ban whenever the national average price for diesel reaches $5 per gallon.
In a Sept. 19 social media post, Sen. Grassley argued that high diesel prices are devastating farm income, questioning why the administration does not implement an embargo similar to those used in the 1970s to address food inflation.
However, energy analysts warn that an export ban could prove counterproductive. Because the U.S. produces approximately 5.3 million barrels of distillates daily—well above the 3.6 million barrels required for domestic demand—refineries rely on international trade to manage supply.
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Experts note that current price spikes are driven by global production and shipping disruptions linked to the wars in Ukraine and Russia, as well as the conflict involving Iran. They argue that restricting exports would likely exacerbate the global supply crunch and ultimately drive prices higher.
De Haan, an industry expert, stated that an export ban is very likely to backfire. He explained that most lawmakers think this sounds easy, but it does not put products in the place they need to be and is fraught with problems that have not been thought out.
Refineries might circumvent such a ban by shifting production toward jet fuel or exporting partially refined products, according to De Haan. Tracy Shuchart, CEO of Hilltower Resource Advisors, noted in a Sept. 15 social media post that domestic refineries would likely cut diesel production in response to a ban, effectively removing the very supplies the policy aims to protect.
Instead of an export ban, analysts suggest alternative measures, such as extending the Jones Act waiver beyond its Nov. 15 expiration date or temporarily suspending federal mandates for renewable fuel blending, which could reduce costs by 10 to 20 cents per gallon. De Haan also emphasized the importance of reopening the Strait of Hormuz to stabilize global oil supplies.
Despite concerns, data from GasBuddy indicates that there are no actual diesel shortages in the United States. While individual stations may occasionally run out of fuel or delay shipments in hopes of lower future prices, the broader supply chain remains intact.
Reporting by Policy-Wire (PW)