What happened
Diesel prices have reached all-time highs, prompting several Republican senators to call for a ban on diesel exports. The proposal has also received support from President Trump. However, experts warn that such a ban would have devastating downstream effects.
The US fuel network is not equipped to distribute diesel throughout the country, with nearly 55% of refining occurring along the Gulf Coast. As a result, much of the surplus diesel must be exported, as there are limited avenues to transport it to other domestic markets.
Refineries are also limited in their ability to adjust the proportions of gasoline and other distillates produced from a barrel of crude oil. Cutting back on crude oil production to curtail a diesel surplus would be economically devastating.
A ban on diesel exports would likely lead to higher prices for most Americans, as the US represents roughly 20% of global diesel supply. Removing this portion would push global prices up, affecting regions that depend on diesel imports, such as the East and West Coasts.
Previous analyses have concluded that a ban on diesel exports would have adverse effects on the country, including shutting down refining capacity, increasing prices, and dropping GDP. Instead, lawmakers are being urged to focus on long-lasting solutions, such as making federal land leasing more predictable, streamlining permitting, and creating a regulatory environment that fosters investment in essential energy sources.
