Trump's Diesel Ban Comes With A Bigger Bill at The Pump

Keeping American diesel at home sounds like the fastest way to make it cheaper, but the opposite could happen. President Donald Trump said on Tuesday that he backs a diesel export ban. 53 a gallon, according to AAA. “I’ve said let’s not send out the diesel.

We make a lot of diesel,” Trump said. Treasury Secretary Scott Bessent said the administration is studying a full or partial ban. According to American Petroleum Institute CEO Mike Sommers, however, that would make things worse. S.

diesel prices below global levels and squeeze refining margins, the gap between crude costs and fuel prices. S. refining capacity sits on the Gulf Coast, which makes more diesel than it uses. Also, pipeline and geography limits keep that surplus from easily reaching the East Coast.

With exports blocked, Gulf Coast storage tanks would fill. S. energy exports would only compound the problem—exacerbating refining challenges and ultimately hurting consumers,” Sommers said on Tuesday. Diesel Prices Hit Record As The World Loses Refining Capacity When diesel gets more expensive, the cost of shipping almost everything rises, and that feeds inflation.

Global diesel markets have lost supply following disruptions to refining capacity in Russia and the Middle East. S. S. refineries are already operating near multiyear highs, while inventories remain tight.

API, the industry’s main trade group, says about 8 million barrels of diesel are traded by sea each day. S. supplies roughly 20% of them. Removing that supply would push world prices higher.

Energy economist Philip Verleger said world prices could double, because diesel demand barely falls when prices rise. 97 million barrels (nearly 13% below five-year seasonal average) US refinery utilization About 97% Source: Kpler and industry data Read Also: Micron Earnings Are Set for a 10x Jump: The Stock Is Still the Cheapest in Tech How A Ban Could Push Prices Higher There is another complication. Refineries cannot choose to make only diesel. Processing crude produces a combination of gasoline, diesel, jet fuel and other petroleum products.

If Gulf Coast refiners lose access to overseas diesel buyers, storage tanks could begin filling. Eventually, refiners may have to process less crude. That means less diesel but also less gasoline and jet fuel. S.

soybean exports to contain domestic food inflation. The move angered major customers, including Japan, and encouraged buyers to diversify toward suppliers such as Brazil. ” For Valero Energy Corp. (NYSE: VLO ), Marathon Petroleum Corp.

(NYSE: MPC ) and Phillips 66 (NYSE: PSX ), that is the heart of the investment question. S. prices briefly. But if it cuts refining margins, fills Gulf Coast storage and forces refiners to reduce crude runs, America could eventually end up making less fuel.

53 per gallon, Washington wants a fast solution. The refinery system may make that impossible. Read Also: Bank of America Says It May Take $150 Oil to Break the Economy Image: Shutterstock