Diesel Export Ban Could Backfire, Sending Gas Prices Soaring: Experts

The Trump administration is seriously considering a temporary ban on diesel exports to combat record-high fuel costs, but economic experts caution that such a move could ultimately increase prices for American consumers. President Trump told reporters on Sunday that his administration is “very seriously” evaluating the proposal, which has gained traction among Republican lawmakers seeking to lower energy expenses.

Diesel prices surged to a record high of $6.53 a gallon on September 22 before dipping slightly to $6.45 a gallon by Monday, according to AAA data. Advocates for the ban argue that because U.S. refineries produce approximately 1.5 million more barrels of diesel daily than domestic demand requires, halting exports would flood the local market and reduce costs for farmers, trucking companies, and other businesses.

However, Goldman Sachs warns that any initial relief would be short-lived. The investment bank estimates that an export ban could lower diesel prices by about 25 cents per gallon while refiners have storage capacity for their surplus. Once those tanks are full, the bank projects that gasoline prices could rise by 30 cents per gallon for each additional week the ban remains in place.

“The longer a diesel export ban lasts, the more disruptive it would likely be by putting upward pressure on gasoline prices because diesel, gasoline and jet fuel are largely produced together,” Goldman Sachs analysts stated. “Therefore, downward pressure on diesel production can mean downward pressure on gasoline production, i.e. upward price pressure on gasoline.”

Industry groups and other financial institutions echo these concerns. The American Fuel & Petrochemical Manufacturers argued that preventing refiners from exporting excess diesel would force them to reduce overall fuel production, thereby increasing reliance on imported fuel and pushing prices upward.

Alan Gelder, an analyst at Wood Mackenzie, described the policy as potentially ironic. “Cutting crude runs to manage the oversupply would shift the cost burden from diesel to gasoline,” he said. “A policy designed to bring relief at the diesel pump could end up driving prices higher at the gasoline pump.”

JPMorgan analysts noted in a September 24 report that if the ban extends beyond 30 days, the economics of refining would break down. Since refineries cannot produce diesel without also creating gasoline and other products, crude runs would inevitably fall, reversing early price gains and contradicting the goals of policymakers.

The White House did not immediately respond to requests for comment regarding the potential ban.