US Energy Secretary Rejects Outright Diesel Export Ban, Favors Voluntary Limits

Energy Secretary Chris Wright announced Wednesday that the Trump administration intends to avoid an outright ban on diesel exports, opting instead for voluntary limitations as global prices surge due to international conflicts. Wright's statement comes amid reports that the White House was preparing a 90-day prohibition on diesel exports.

"We’re trying to avoid a blunt hammer of a government policy, understanding the complexity of refining," Wright told The Wall Street Journal. He emphasized the need for the U.S. to continue supplying the global diesel market while addressing domestic price concerns.

Politico had reported earlier that administration officials were preparing an outright ban, citing sources familiar with the discussions. The report indicated that President Trump was leaning towards announcing the ban by the end of the week, despite internal opposition from some officials and oil industry executives. A White House official, however, denied the report, calling it "another fake news news story from Politico."

Wright expressed his concerns about the potential repercussions of a complete ban. "The blunt tool of banning diesel exports definitely doesn’t work," he stated at an event in New York. He warned that blocking exports could lead to refiners being unable to sell excess diesel, potentially forcing them to reduce refinery operations. Such a reduction could, in turn, put upward pressure on gasoline and jet fuel prices.

Average U.S. diesel prices have risen significantly, standing at $6.52 a gallon on Wednesday, a 76% increase from the previous year, according to AAA. The average price for a gallon of gasoline was $4.47. These price hikes have impacted farmers and other heavy diesel users, particularly as global supplies have tightened due to ongoing conflicts in Iran and Ukraine.

President Trump had previously voiced support for halting diesel exports, responding to pressure from Republican lawmakers representing agricultural areas and competitive congressional districts as the midterm elections approach. "I’ve said, let’s not send out the diesel," Trump told reporters Tuesday.

Treasury Secretary Scott Bessent had indicated that officials were studying the feasibility of a full or partial restriction. However, the oil industry has expressed alarm over the prospect of a blanket ban, arguing that Gulf Coast refiners rely on foreign markets to absorb surplus diesel that cannot be easily redirected domestically.

Analysis by S&P Global Energy CERA suggests that a full ban could force U.S. refiners to cut crude processing by approximately 1.9 million barrels per day, leading to a potential reduction in gasoline production and possibly turning the country into a net gasoline importer during the fourth quarter. This is because refineries produce diesel, gasoline, and jet fuel concurrently, and a reduction in overall runs due to export restrictions would decrease the output of all these products.

The American Fuel & Petrochemical Manufacturers have also opposed a full export ban, asserting that restricting exports would diminish domestic fuel production rather than increase supplies for U.S. consumers. Some industry lobbyists have also raised concerns about potential antitrust issues arising from discussions among refiners regarding voluntary export limits.