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Trump says he ordered staff to work up a ban on 1.6 million barrels a day of diesel exports
Diesel at $6.53 a gallon is a political problem for Trump. The remedy under discussion would hold a record 1.6 million barrels a day at home, in a market where the world price still sets the US price.
The Investor · Invest desk
What happened
- Trump told reporters on the 22nd that his administration is weighing a ban on US diesel exports to cut fuel bills for farmers, truck drivers and businesses, according to The New York Times.
- The American Automobile Association put the nationwide average diesel price at $6.53 a gallon that day, about 1.76 times the $3.69 recorded a year earlier.
- US diesel exports have hit a record this year on growing global demand, topping 1.6 million barrels a day in recent weeks on EIA figures.
- Treasury Secretary Scott Bessent said the administration is reviewing whether a diesel export ban is feasible given total US refining capacity.
- The American Petroleum Institute said a ban would not ease costs for businesses and consumers and would deepen the shortage if refiners cut output in response.
Compiled by The InvestorSomething wrong?How this is made
Why it matters
- contradiction The policy assumes holding barrels at home lowers the US price; De Haan says the global balance sets it, so on his account the same measure either does nothing or works only by shrinking supply.
- cost If withholding exports from the largest supplier of 20% of world diesel lifts the world price, the farmers and truckers named as beneficiaries pay a higher benchmark on top of any domestic effect.
- exposure Overseas buyers who absorbed the extra 500,000 barrels a day since before the Iran war would have to find another seller, and US refiners lose their best-paid destination for that volume.
- decision Refiners have to plan crude runs against a policy risk on export cargoes, with the incentive to announce nothing until after the midterms.
Exports above 1.6 million barrels a day run roughly 500,000 barrels above the 1.1 million of the period before the Iran war, about 45 percent more [6][2]. Keep that whole flow at home for thirty days and inventories gain 48 million barrels, against a level the US Energy Information Administration expects to fall below 100 million barrels this month [3][8].
Trump said of the proposed ban, "I ordered it," and added, "I have asked my staff to do that, and I have kept talking about it." [3]
A pump price of $6.53 a gallon is $2.84 above the $3.69 of a year earlier [5][1]. What the price measures is a shortage abroad as much as at home: supply shrank with the war involving Iran and the years-long Russia-Ukraine war, and reduced refinery operating capacity compounded it [13]. The United States supplies 20% of the world's diesel and has become the largest supplier, so withholding barrels lifts the world price [12]. Patrick De Haan, head of petroleum analysis at GasBuddy, said the global balance is what sets US prices [11]. He wrote on X that the step would backfire and was not a good idea [10].
The same numbers work the other way, from the refiner's margin. A plant earning the world price on export cargoes will not sell the same barrel domestically at a discount for long. If the US price has to fall far enough to clear an extra 500,000 barrels a day, cutting crude runs is the profitable answer [2][9].
In my view a ban lands on refiner realisations before it lands on pump prices, and on refinery runs after that. The competing argument is political. Blocking exports would show the administration acting aggressively on fuel costs [16], Republicans have been calling for exactly that as prices set records [15], and with candidates in long-standing Republican districts in tight races [14], a policy that signals action has value whatever it does to pump prices.
The weekly data would settle it. Inventories climbing back through 100 million barrels while the AAA average falls and refinery runs hold would show the domestic balance setting the US price [8][5].
Treasury Secretary Scott Bessent framed the feasibility question around total US refining capacity [4], and reduced refinery operating capacity is part of what tightened this market to begin with [13]. An export restriction changes which customers get the barrels. The report does not include a timetable or the legal authority a ban would use.
What to watch
- Whether congressional Republicans put an export restriction into a bill rather than leaving it to the executive.
- Whether EIA weekly export volumes drop back from 1.6 million barrels a day before any formal restriction exists.
- Whether refiners guide to lower fourth-quarter crude runs while the review is under way.