Diesel prices are soaring, and there’s a palpable sense of urgency. A number of Republican senators, especially those hailing from Midwest agricultural states and facing tight races this midterm, are urging the administration to impose a ban on diesel exports. Even former President Trump has publicly backed this notion. Lawmakers are eager to alleviate the pressure on consumers and the farming sector, which is understandable. However, the instinct to immediately “do something”—like banning diesel exports—is misguided and could lead to negative consequences.
It might seem logical to think that restricting diesel exports will ensure that local needs are met first. Unfortunately, that’s not how the petroleum market operates—it’s inherently global.
To actually reduce a diesel surplus, we would need to cut crude oil production altogether, and that would be damaging to the economy.
The infrastructure for U.S. fuel distribution isn’t designed to efficiently send diesel across the country. About 55% of refining happens along the Gulf Coast, generating more diesel than the region needs. However, due to limited ways to transfer this surplus to domestic markets that need it, like the East and West Coasts, a large portion must be exported. Both coasts depend on diesel imports to meet their energy needs.
There’s a shortage of pipelines and shipping capabilities required to transport energy where it’s needed. Storage space is also limited—there’s only so much that can be held.
Refineries can’t just change the production output at the flip of a switch. When processing crude oil, a specific mix of gasoline, diesel, and other fuels is produced, and refiners can’t easily adjust these ratios to match fluctuating demands.
Cutting back diesel exports wouldn’t do anything to fix the surplus without also decreasing crude oil production, which would have dire economic repercussions.
We’re already facing considerable gasoline shortages and rising prices. Tightening supply further would only escalate prices even more. Voters consistently identify the economy and affordability as their primary concern, meaning that increasing gas prices would only add more strain to household budgets.
Currently, U.S. diesel exports account for about 20% of the global supply, which helps to keep international prices in check. Removing this support would likely lead to higher prices, affecting regions that depend on diesel imports—namely, the East and West Coasts.
A proposed ban on diesel and other refined products isn’t new; it has been thoroughly considered before and was ultimately dismissed. The Biden administration discussed it back in late 2021 but opted not to pursue it after evaluations indicated a significant negative impact on the country.
A study by the American Council for Capital Formation in 2022 projected that such a ban could eliminate roughly 1.3 million barrels a day from refining capacity. Over two-thirds of consumers would likely face price hikes of about $0.15 per gallon for regular gas and around $0.45 for diesel, resulting in a $44 billion drop in GDP the following year.
Similarly, McKinsey & Company found that while a ban might temporarily ease prices for customers in the Gulf and Midwest regions, the relief wouldn’t last. Dependence on diesel imports would mean that price increases on the coasts would escalate by at least $0.60 a gallon due to inflations in global prices.
Until there’s a long-term resolution to the global conflicts and supply disruptions that currently affect resource flows, there isn’t a quick fix that will lower energy costs. Energy markets and refining operations are interconnected globally, and impulsive actions can cause ripples that affect supply chains, impacting various parts of our own nation.
Instead, lawmakers should concentrate on sustainable solutions that shore up our domestic energy resilience against external challenges.
- Enhance the predictability and feasibility of federal land leasing for petroleum exploration and development.
- Simplify permitting processes to accelerate the construction of energy infrastructure, such as refineries and pipelines.
- Foster a regulatory environment that promotes investment in the energy sources vital to our economy.
A sustainable resolution requires resisting the urge for quick, politically satisfying actions, with instead a focus on policies that promote supply growth, modernize infrastructure, and bolster the resilience of our energy systems.
Banning diesel exports would likely hurt most Americans, destabilize global markets, and exacerbate existing strains in vulnerable regions. Rather than stifling connectivity within an intricately linked network, lawmakers should seek reforms that enhance investment, optimize distribution, and ensure that the U.S. can reliably meet its own energy needs.
Ultimately, achieving lower prices hinges on fostering growth and modernization—rather than implementing restrictions.
