EU Weighs US Diesel Export Ban as Prices Spike

Governments across Europe are enacting a range of measures, including subsidies, taxes, and policy revisions, to shield their economies, companies, and citizens from record gasoline and diesel prices. These actions come as global energy supplies are disrupted by conflicts in Ukraine and the Middle East.

The Organization for Economic Cooperation and Development reports that seven of the ten nations most actively trying to mitigate the economic impact of diminished energy supplies and soaring fuel costs are within the European Union. Measures vary by country: Lithuania has halved train ticket prices, Greece is increasing gambling taxes to fund relief efforts, and Italy has delayed coal-fired power plant demolitions while streamlining approvals for oil and natural gas projects. Poland is considering taxing the profits of fuel producers.

European Commission President Ursula von der Leyen acknowledged the significant pressure from rising energy and borrowing costs, emphasizing the need to increase affordable, homegrown, clean energy sources like renewables and nuclear power to achieve independence and reduce prices. France has introduced a 450 million-euro package to expand fuel relief for workers and has extended subsidies for farmers, fishermen, and construction companies. President Emmanuel Macron has also advocated for relaxing EU fuel quality regulations to boost diesel and kerosene production and for increasing the permissible level of biodiesel in standard diesel fuel.

In Germany, fuel tax cuts that expired in June are set to be renewed from October 1st through the end of the year, a move expected to cost 2.5 billion euros. The German government is also exploring a fuel price cap by January 1st. Spain has extended its gasoline and diesel tax cuts, introduced in March as part of a 5 billion-euro package, and has maintained fuel subsidies for various sectors. Several EU nations have also tapped strategic oil reserves as part of an international agreement.

The EU has been working to reduce its reliance on Russian energy, increasing its dependence on the United States. A previous agreement committed the EU to purchasing substantial amounts of American energy. However, the potential for the U.S. to ban diesel exports to lower domestic prices is a growing concern for the bloc, which relies on U.S. diesel to fill supply gaps. Brussels is actively lobbying Washington to reconsider such a move, with European Commission spokesperson Olof Gill stating that any disruption would negatively impact both the EU and the U.S., jeopardizing their strong and mutually beneficial energy cooperation.

Pump prices in some European countries have surpassed the equivalent of $12 per gallon. According to the advocacy group Transport & Environment, EU citizens are spending an additional 203 million euros daily on diesel fuel alone. Analysts note the irony that the U.S. appears less vulnerable to a crisis that significantly impacts Europe's economy.